- DXY loses momentum and returns to levels below 90.00.
- US non-farm payrolls stood at -140,000 in December.
- The US unemployment rate was unchanged at 6.7%.
The dollar, when measured by the US dollar index (DXY), it trades on the defensive and returns to the 89.70 / 65 zone.
US Dollar Index Slashes Gains Following NFP Figures
The index accelerated its downward correction after US nonfarm payrolls showed the economy lost 140,000 jobs during December, in stark contrast to expected gains of 71,000 jobs.
On the positive side, the unemployment rate remained at 6.7% versus investors’ anticipation of an upward move to 6.8%.
Meanwhile, sellers of USD weighed in on growing speculation that the Federal Reserve may have to pump in more money to help the economy amid the deteriorating pandemic front.
Additional US data to be presented later include monthly wholesale inventories and consumer credit change for the month of November and the FOMC (permanent voter, moderate) speech by R. Clarida.
What to look for around USD
The index recovers some buying interest and manages to move past the recent lows in the 89.20 region, mainly thanks to the recovery of 10-year US yields, while the space associated with risk appears to be taking a breather. However, the outlook for the dollar remains on the bearish side for the time being amid massive monetary / fiscal stimulus in the US economy, the Federal Reserve’s “longer down” stance and prospects for a strong recovery. in the global economy.
Technical levels
At the moment, the index is losing 0.15 to 89.68 and faces the next support at 89.20 (January 6, 2021 low) followed by 88.94 (March 2018 monthly low) and 88.25 (February 2018 monthly low). On the other hand, a breakout of 91.01 (weekly high on December 21) would point to 91.23 (weekly high on December 7) and finally 91.92 (23.6% Fibonacci from the fall of 2017-2018).
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