USD Index meets resistance near 101.80 as traders digest NFP

The greenback, in terms of the USD Index (DXY), grabs fresh oxygen and moves to 2-day highs near 101.80 on Friday.

USD Index stronger on firm Payrolls

The index makes a U-turn and rapidly revisits the 101.80 region – or 2-day highs – in the wake of another solid prints from the US jobs report for the month of April.

Indeed, the US economy added more jobs than initially anticipated during April (253K), while the unemployment rate unexpectedly slipped back to the 3.4% (from 3.5%).

Also collaborating with the move higher in the Buck, Average Hourly Earnings topped consensus and rose 0.5% MoM and 4.4% over the last twelve months, while the Participation rate remained unchanged at 62.6%.

What to look for around USD

The index now looks bid well north of the 101.00 zone following a better-than-expected Nonfarm Payrolls, as investors continue to assess of the last FOMC event.

Looking at the broader scenario, the US Dollar seems to be facing downward pressure in light of the Fed’s recent indication that it will probably pause its normalization process in the near future. That said, the future direction of monetary policy will be determined by the performance of key fundamentals (employment and prices mainly).

In favour of a Fed’s pause appears the persevering disinflation – despite consumer prices remain well above the target - and nascent easing in the labour market, all amidst steady speculation of a a probable recession.

Key events in the US this week: Balance of Trade, Initial Jobless Claims (Thursday) – Nonfarm Payrolls, Unemployment Rate, Consumer Credit Change.

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in 2024. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is up 0.14% at 101.60 and the break above 102.40 (monthly high May 2) would open the door to 102.80 (weekly high April 10) and then 103.05 (monthly high April 3). On the flip side, initial contention comes at 101.01 (weekly low April 26) prior to 100.78 (2023 low April 14) and finally 100.00 (psychological level).