- The Index remains hesitantly trading around 103.50.
- Improving risk space weighs on the dollar.
- Nonfarm payrolls for May have exceeded expectations at 339,000.
The US Dollar Index (DXY)which measures the dollar against a basket of its main competitors, alternates gains and losses around 103.00, as investors continue to assess the results of the US jobs report.
DXY remains listless after payrolls
Following a short-lived burst of strength shortly after the US Non-Farm Payrolls surprise to the upside in May, the index slowly returned to its current comfort zone around the 103.50 zone by the end of the week.
In fact, the dollar briefly touched the 103.70/75 band again, or daily highs, after the US economy added 339,000 jobs in May and the unemployment rate rose to 3.7%. Based on other results, median hourly earnings increased 0.3% MoM and 4.3% year over year while the participation rate was unchanged at 62.6%.
Meanwhile, Thursday’s vote to pass the US debt ceiling bill in the US Senate continues to underpin the better tone in the risk complex and therefore maintains the Dollar price action depressed, all in combination with the now firm consensus around a Fed pause at the June meeting.
What to watch out for in the USD
The index holds trade around the 103.50 zone amid faltering price action on Friday.
Meanwhile, bets for another 25 basis points at the next Fed meeting in June suddenly reversed course despite firm resistance from leading US fundamentals (employment and prices mainly), taking a toll on the recent recovery of the dollar and favoring a further decline in US yields.
Instead, the further tightening of credit conditions in response to the uncertainty surrounding the US banking sector appears to reinforce the Fed’s pause.
technical levels
Now, the index is down 0.04% at 103.52 and faces next support at the 100-day SMA at 102.91, followed by the 55-day SMA at 102.41 and finally 101.01 (weekly low 26 Apr). To the upside, a break of 104.69 (monthly high May 31) would open the door to 105.58 (200-day SMA) and then 105.88 (2023 high March 8).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
