- DXY Index is currently trading at a loss around 103.70.
- The forthcoming week will see the US labor market data as a pivotal factor influencing the movements of the DXY Index.
- Anticipated commencement of the easing cycle in June could constrain potential losses.
The US Dollar Index (DXY) is currently hovering around 103.70, showing slight declines on Monday. Investors are closely monitoring potential changes aligned with the incoming data flow, particularly the crucial Nonfarm Payrolls (NFP) figures for February, scheduled for release later this week.
Ongoing developments in the US labor market are shaping the trajectory of the Federal Reserve’s anticipated easing cycle, expected to initiate in June. This implies that the Fed might adopt a more accommodative stance should there be signs of a slowdown in employment. A dovish perspective, inherently signaling the likelihood of reduced interest rates and imminent cuts, has the potential to contribute to a depreciation of the US Dollar.
Daily digest market movers: DXY stands weak at the start of the week, eyes on labor market data
- Forecasts for the upcoming Nonfarm Payrolls report (NFP) anticipate the addition of 200,000 jobs in February, reflecting a slowdown compared to January’s figures. Analysts will closely examine indicators of wage inflation, including the Average Hourly Earnings, and assess changes in the Unemployment Rate.
- Additional pivotal employment data scheduled for release this week encompasses JOLTs Job Openings and ADP Employment Change figures for February, along with the weekly Jobless Claims report.
- The market anticipates no chance of a rate cut in the upcoming March 20 meeting, with the likelihood increasing to 25% by May 1 and surging to 90% for the June meeting.
- Current US Treasury bond yields are elevated, standing at 4.59% for the 2-year, 4.20% for the 5-year, and 4.22% for the 10-year bonds. This could potentially restrain downward movement during the session.
DXY technical analysis: DXY faces bearish pressure in near term, bulls control broader view
The technical analysis for DXY presents a somewhat intricate picture. The Relative Strength Index (RSI) signals a bearish inclination with a downward trajectory, suggesting an overall negative momentum for the index in the short term. Additionally, the noticeable ascent of red bars in the Moving Average Convergence Divergence (MACD) reinforces the growing selling momentum, lending additional support to the bearish outlook.
Contrarily, the Simple Moving Averages (SMAs) depict a contrasting perspective on a broader scale. Despite the bears exerting pressure and pushing the DXY below the 20 and 100-day SMAs, it remains conspicuously above the 200-day SMA. This steadfast position indicates that the bulls are resolute, retaining dominance over the longer time frame. Consequently, although the near-term outlook may lean towards the bearish side, the persistent bullish undertone demands acknowledgment.
