- The US Dollar is poised to conclude the week with significant losses, as confirmed by the latest US Jobs report revealing an increase in unemployment and a reluctance among employers to offer higher wages for the labor force.
- The US Dollar Index is currently trading below 103.00, and it appears likely to finish the week in the mid-102.00 range.
The US Dollar (USD) is experiencing its sixth consecutive day of declines, with the latest downward movement triggered by the US Jobs Report. While the Nonfarm Payrolls figure initially presented an optimistic surprise, the substantial downward revision of the previous number weighed on the US Dollar. Traders reacted decisively as they observed the Unemployment rate and Average Hourly Earnings signaling a potential contraction.
As the economic calendar concludes for the week, markets can now digest the data. This week has been pivotal, with indicators such as the US Challenger Job Cuts, weekly Jobless Claims, and the Jobs Report collectively signaling a shift in the US economic landscape. This development creates an opening for the US Federal Reserve to consider implementing rate cuts in one of its upcoming meetings post-March.
Daily digest market movers: Dust settles
The US Jobs Report for February brought unexpected developments. Nonfarm Payrolls showed growth at 275,000, surpassing expectations. However, traders focused more on the negative surprise of the downward revision from 353,000 to 229,000 in the previous figure. Yearly Average Hourly Earnings saw a slight decrease from 4.4% to 4.3%, and Monthly Average Hourly Earnings contracted from 0.6% to 0.1%. The Unemployment Rate witnessed an uptick from 3.7% to 3.9%.
In the aftermath, equities exhibited a flat to mild green trend post-Asia closing. Thursday’s market fervor, ignited by Powell’s remarks about the Fed’s readiness for rate cuts, continued. The CME Group’s FedWatch Tool indicates a 95% expectation for a Fed pause in the March 20 meeting, with a 5% chance of a rate cut. The benchmark 10-year US Treasury Note trades around 4.09%, marking its lowest level in over a week.
US Dollar Index Technical Analysis: Some profit taking on US Dollar short underway for next week
The US Dollar Index (DXY) is poised to stabilize within the 102-range following substantial losses triggered by the recent release of the US Jobs Report. The key takeaway is the emerging trend of rising unemployment coupled with employers hesitating to offer substantial wage increases. This may indicate a potential downturn in the job market, with further negative data anticipated in the coming weeks.
On the upside, the initial recovery targets are set at 103.28, corresponding to the 55-day Simple Moving Average (SMA), and the 200-day SMA around 103.72. Beyond these levels, the 100-day SMA at 103.81 poses a potential double resistance. Breaking through these hurdles, the crucial level on the upside is 104.60.
Navigating in somewhat uncertain territory, the DXY lacks significant nearby support levels. Further downside appears likely, with 101.75 as the next notable level, holding pivotal relevance. A breach below this could pave the way for another leg lower towards 100.61, marking the low of 2023.
