US Dollar lifted by Nonfarm Payrolls surprise and Powell’s cautious stance
- DXY climbs near the 103 zone on Friday as strong job numbers offset ongoing tariff uncertainty.
- Fed Chair Powell warns tariffs could lift inflation and dampen growth while hinting at no rush for policy moves.
- Resistance is seen at 103.73 and above; support is near 102.61 as technicals remain largely bearish.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, rises on Friday and is trading near the 103 area following a stronger-than-anticipated Nonfarm Payrolls report. The Greenback's momentum is also shaped by Federal Reserve (Fed) Chairman Jerome Powell’s remarks, where he flagged greater-than-expected inflation risks from tariffs while emphasizing the Fed’s wait-and-see approach. Technically, DXY remains in a bearish structure despite the rebound.
Daily digest market movers: US Dollar recovers as Powell strikes balance
- US Nonfarm Payrolls surged to 228,000 in March, well above the 135,000 forecast and even beating the highest projections.
- Fed Chair Powell acknowledged that tariffs could have a stronger-than-anticipated inflationary and economic impact, though policy changes remain on hold for now.
- He reiterated that inflation is closer to target but still slightly elevated, and the Fed is monitoring uncertainty from federal policies, especially trade.
- Powell stated the Fed’s job is to avoid temporary price hikes turning into persistent inflation, though long-term expectations remain anchored.
- China's retaliation came swiftly, with a 34% tariff on all US imports from April 10, compounding fears of an extended trade conflict.
- Powell also highlighted a slowdown in progress toward the 2% inflation target while noting that the job market remains balanced with low unemployment.
- Surveys indicate a deteriorating sentiment and higher uncertainty amid escalating geopolitical and economic tensions.
Technical analysis
The US Dollar Index (DXY) climbs modestly in Friday’s session, but bearish undertones persist as it hovers around the 103 area. The Moving Average Convergence Divergence (MACD) continues to flash a sell signal, and while the Relative Strength Index (RSI) reads 35.58—within neutral bounds—it reflects a fragile bullish momentum. The 20-day, 100-day, and 200-day Simple Moving Averages (SMA), alongside the 10-day Exponential Moving Average (EMA), all point to a bearish trend. The Ultimate Oscillator and Stochastic %K are also neutral, confirming indecision. On the upside, resistance levels are seen at 103.50, 103.73, and 103.81. Meanwhile, support rests at 102.61, with further pressure likely if that level gives way.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
Author
Patricio Martín
FXStreet
Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.
