The US Dollar Index (DXY) took a breather on Monday after last week’s rally, holding steady above 101.50. With the August jobs report scheduled for release on Friday, investors are anticipating a significant increase in Nonfarm Payrolls, which could provide further support to the US Dollar.
Despite strong economic growth, the market’s expectations for aggressive monetary easing from the Federal Reserve remain unchanged. While a rate cut in September is certain, the size of the cut will depend on incoming data.
Key Points to Watch This Week:
- August’s Nonfarm Payrolls consensus estimate is 165K, with an unofficial whisper number of 150K.
- Unemployment Rate expected to drop to 4.2%, while Average Hourly Earnings are forecasted to rise to 3.7%.
- ISM manufacturing and services PMIs expected to show slight declines but remain in expansionary territory.
- Fed’s Beige Book report likely to highlight tight labor market conditions.
- Investors maintain dovish bets on the Fed, with expectations of 100 bps of cuts by year-end.
Technical Analysis: DXY Consolidates, Key Levels to Watch
The DXY Index is currently consolidating after last week’s rally, with key support at 101.50. The Relative Strength Index (RSI) is below 50, while the MACD shows potential for a bullish trend. Support levels for DXY are 101.30 and 101.00, with resistance at 102.00 and 102.30.
US Dollar FAQs
The US Dollar (USD) is the world’s most traded currency, influenced by Federal Reserve monetary policy. The Fed’s decisions on interest rates and quantitative easing impact the value of the USD. QE, used during financial crises, weakens the Dollar, while QT strengthens it.