Dollar Index DXY remains above 104.00, focus on US services PMI

• The DXY Dollar Index is moving higher, around the 104.00 level on Monday.
• The Fed chair reiterated that the next meeting in March was too early for a rate cut.
• Nonfarm payrolls (NFP) for January rose to 353,000, above expectations.

The DXY US Dollar Index, a measure of the value of the US Dollar (USD) against a weighted basket of currencies used by US trading partners, gains momentum above the psychological level of 104.00 during the early hours of the European session on Monday. Encouraging US employment data and expectations that the US Federal Reserve (Fed) could keep interest rates higher for longer than expected boost the dollar overall. At the time of writing, the DXY index is trading near 104.05, adding 0.13% on the day.
Fed Chair Jerome Powell said Sunday night that the central bank remains on track to cut interest rates three times this year. However, Powell reiterated that the Fed's next meeting in March was probably too early for a rate cut. Most economists believe the first cut will likely come in May or June.
Data released by the US Bureau of Labor Statistics (BLS) showed that US nonfarm payrolls (NFP) for January rose to 353,000 from 333,000 in December (revised upward from 216,000). Additionally, the Unemployment Rate remained unchanged at 3.7% in January. Average hourly earnings rose 4.5% year-over-year in January, from 4.4% in the previous reading. Following the report, the probability of a rate cut in March has fallen to 19%, down from 38% the previous day, according to the CME's FedWatch tool.
On the other hand, US national security advisor Jake Sullivan stated that the US would undertake new attacks and additional actions in response to the drone attack in Jordan that killed three soldiers last weekend. week. Rising tension in the Middle East could boost monetary safe-haven flows and benefit the Dollar.
Later, market participants will focus attention on the US ISM Services PMI for January, which is estimated to improve to 52.0 from 50.6 in December. The Fed's Raphael W. Bostic will speak later Monday.