US Dollar Index Analysis
The US Dollar Index is currently trading in a tight range this Friday morning. The market is in a state of anticipation as it awaits the release of the US Non-Farm Payrolls (NFP) report, a key event this week.
The index remains above the trendline support at 106.01, following a two-day pullback from its 2023 peak at 107.03. This pullback appears to be a healthy correction of the larger uptrend, providing an opportunity for traders to re-enter the bullish market at better levels.
Daily studies continue to support a bullish outlook, suggesting a potential renewed push through the critical resistance zone at 107.00. A break above this level would signal a continuation of the bullish trend.
However, today's direction will likely be influenced by fundamental factors as traders seek more information about the state of the US labor market. This information will directly impact the Federal Reserve's perspective on future interest rates.
Job growth in the US is expected to slow slightly in September (NFP Sep 170K forecast vs Aug 187K), but the unemployment rate is anticipated to decrease from a 1 ½ year high (Sep 3.7% forecast vs Aug 3.8%). Wage growth is expected to remain strong (Sep 0.3% vs Aug 0.2%).
These forecasted numbers suggest that the US labor sector remains robust and is least affected by high borrowing costs among the economy's key sectors. Any expected easing is not likely to significantly impact the overall positive outlook.
In such conditions, the Federal Reserve may opt for another rate hike by year-end or more likely, maintain tight monetary policy for some time. This is because recent drastic measures to control inflation have not yet had the desired impact on the economy.
Two other reports from the US labor sector released earlier this week showed mixed results. Job openings rose well above forecasts, while hiring in the private sector fell significantly last month.
If the September NFP report exceeds expectations, it would reinforce the Federal Reserve's hawkish stance and further support the dollar. However, if the NFP report misses expectations, demand for the dollar would ease.
Initial direction signals are expected on a sustained break of trendline support (bearish) or a lift above pivotal barriers at 107.00 zone (bull
Resistance: 106.96; 107.13; 107.88; 108.79.
Support: 106.01; 105.50; 105.13; 104.32.
The index remains above the trendline support at 106.01, following a two-day pullback from its 2023 peak at 107.03. This pullback appears to be a healthy correction of the larger uptrend, providing an opportunity for traders to re-enter the bullish market at better levels.
Daily studies continue to support a bullish outlook, suggesting a potential renewed push through the critical resistance zone at 107.00. A break above this level would signal a continuation of the bullish trend.
However, today's direction will likely be influenced by fundamental factors as traders seek more information about the state of the US labor market. This information will directly impact the Federal Reserve's perspective on future interest rates.
Job growth in the US is expected to slow slightly in September (NFP Sep 170K forecast vs Aug 187K), but the unemployment rate is anticipated to decrease from a 1 ½ year high (Sep 3.7% forecast vs Aug 3.8%). Wage growth is expected to remain strong (Sep 0.3% vs Aug 0.2%).
These forecasted numbers suggest that the US labor sector remains robust and is least affected by high borrowing costs among the economy's key sectors. Any expected easing is not likely to significantly impact the overall positive outlook.
In such conditions, the Federal Reserve may opt for another rate hike by year-end or more likely, maintain tight monetary policy for some time. This is because recent drastic measures to control inflation have not yet had the desired impact on the economy.
Two other reports from the US labor sector released earlier this week showed mixed results. Job openings rose well above forecasts, while hiring in the private sector fell significantly last month.
If the September NFP report exceeds expectations, it would reinforce the Federal Reserve's hawkish stance and further support the dollar. However, if the NFP report misses expectations, demand for the dollar would ease.
Initial direction signals are expected on a sustained break of trendline support (bearish) or a lift above pivotal barriers at 107.00 zone (bull
Resistance: 106.96; 107.13; 107.88; 108.79.
Support: 106.01; 105.50; 105.13; 104.32.
