- The latest Nonfarm Payrolls data released by the US Bureau of Labor Statistics surpassed expectations, presenting a positive employment scenario.
- However, Average Hourly Earnings for February fell short of anticipated figures, and there was an increase in the Unemployment Rate.
- Despite the positive job growth, market sentiment continues to anticipate the first interest rate cut in June.
- The index is on track to conclude the week with a 1% decline, marking its weakest performance since December.
On Friday, the US Dollar Index (DXY) is hovering around 102.60, experiencing a decline. This downward movement can be attributed to the dovish stance adopted by Federal Reserve (Fed) Chair Jerome Powell and the lackluster performance of the US labor market in February.
Although the Nonfarm Payrolls (NFP) report for February revealed an uptick in the US Unemployment rate and a modest easing of Earnings, market sentiment remains convinced that the initiation of the easing cycle is likely in June. Looking ahead, there is a potential for further losses in the USD during the next session, driven by investor concerns about a potential economic slowdown.
Daily digest market movers: DXY falls to lows after NFPs figures
- February’s Nonfarm Payrolls data from the US Bureau of Labor Statistics surpassed expectations, reaching 275,000 and indicating robust employment growth, well above the anticipated 200,000 figure.
- However, the Unemployment rate for February experienced an increase, rising to 3.9%, exceeding expectations set at 3.7%.
- Average Hourly Earnings, a measure of wage inflation, fell short of consensus, registering a 4.3% year-on-year increase.
- US Treasury yields exhibited a mixed performance, with the 2-year yield at 4.48%, the 5-year yield at 4.06%, and the 10-year yield at 4.09%.
- The CME FedWatch Tool suggests that the likelihood of Fed interest rate cuts in March and May remains low, with markets anticipating the first cut to occur in June.
DXY technical analysis: DXY bears seize control, oversold signals loom
The overall outlook for the DXY remains bearish, despite the Relative Strength Index (RSI) approaching oversold conditions. The RSI’s proximity to the 30-level often suggests the possibility of a price reversal, but the current momentum, indicated by the rising red bars on the Moving Average Convergence Divergence (MACD), favors the bears.
Adding to the bearish sentiment, the DXY is positioned below its 20, 100, and 200-day Simple Moving Averages (SMAs), reinforcing the prevailing downward trend. These SMAs are significant technical indicators, and their positioning below current prices typically strengthens the influence of sellers.
Recent bearish price action aligns with the signals from technical indicators, creating a negative short-term outlook. While the RSI’s nearing oversold conditions may offer a potential for buyers to intervene, they are likely to face challenges given the existing negative momentum in the market.
