- DXY corrects lower from the new 2021 highs around 91.60.
- US nonfarm payrolls reached 49,000 in January.
- The unemployment rate in the United States surprised to the upside with 6.3%.
After hitting new yearly highs around 91.60, the US dollar index (DXY) lost some bullish momentum and is now testing daily lows in the 91.20 / 15 area.
Weaker US Dollar Index Despite Rising Yields
The index waned on Thursday’s advance and came under pressure shortly after hitting new yearly highs around 91.60.
The daily correction in the dollar comes despite decent gains in returns from the US 10-year benchmark, which is now navigating the 1.15% region after climbing to the 1.19% zone.
In the US data space, January nonfarm payrolls showed that the US economy created only 49,000 jobs, modestly disappointing expectations. The unemployment rate surprised to the upside and fell to 6.3% during the same period.
In other data, average hourly earnings expanded 0.2% between months and 5.4% over the previous year.
What to look for around USD
The dollar rally is still good and solid and pushed the DXY to new yearly highs around 91.60 earlier on Friday, always on the back of renewed supply bias in the risk space and rising bond market yields. However, the continuation of the dollar’s uptrend is forecast to remain somewhat contained amid the fragile outlook for the currency in the medium / long term, and always in the context of the current monetary / fiscal stimulus. massive in the US economy, the Fed’s “lower for longer” stance and the prospects for a strong recovery in the world economy.
Technical levels
The index is losing 0.36% to 91.19 and faces initial support at 90.63 (55-day SMA) followed by 89.20 (2021 low on Jan 6) and finally 88.94 (March 2018 monthly low). On the other hand, a breakout of 91.60 (February 5, 2021 high) would open the door to 91.84 (100-day SMA) and finally 92.46 (23.6% Fibonacci from the 2020-2021 dip).
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