US Dollar Index Gains Amid Mixed Jobs Data; CPI to Set Next Direction
The U.S. dollar advanced on Friday, rebounding from earlier losses driven by mixed employment data and investor positioning ahead of a critical inflation report due next week. The report could shape market expectations regarding potential interest rate cuts at the Federal Reserve’s upcoming meeting.
The dollar recovered from a three-week low against the euro, which fell 0.3% to $1.0561. The euro recorded a weekly decline of 0.2%, marking losses in four of the last five weeks.
The dollar index, a measure of the greenback against six major currencies, gained 0.3% to 106, reversing earlier losses.
The U.S. unemployment rate ticked up to 4.2% in November, compared to 4.1% in the prior two months. This increase highlighted ongoing weakness in household employment, with the household survey reporting a drop of 355,000 jobs.
Payrolls grew by 227,000 in November, following an upward revision to 36,000 in October. The average monthly job gain over the past four months is now just below 150,000, below the threshold many economists consider sufficient for a growing labor force.
The dollar pared losses after the University of Michigan Surveys of Consumers reported an unexpected rise in December sentiment and an increase in one-year inflation expectations to 2.9% from 2.6% in November.
U.S. rate futures now reflect an 85% probability of a 25-basis-point rate cut at the Fed’s December policy meeting, up from 70% before the jobs data release, according to LSEG.
Looking Ahead
Next week’s Consumer Price Index (CPI) report will likely be a pivotal data point ahead of the Fed’s December meeting. Analysts suggest that while some short-term dollar weakness is possible, any dips could present buying opportunities, setting the stage for strength in early 2025.
Technical Outlook of US Dollar Index
The US Dollar Index (DXY) retreated from the weekly high of 106.73, settling at 106.20 amid volatile trading driven by mixed U.S. economic data and geopolitical uncertainties.
On the weekly chart, the index found support near the previous swing low, forming a High Wave candlestick, indicative of near-term indecision. Despite this, the broader upside momentum remains intact unless the index closes below the critical support level of 105.35.
If the US dollar index sustains above 105.35, it is likely to target 106.33, with intermediate resistance seen around 105.88.
A decisive break below 105.32 could accelerate bearish momentum, potentially pushing the index towards the next support zone at 104.80–104.65.
Traders should monitor U.S. economic releases and geopolitical developments for directional cues.
Until then, Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
Also Read: RBI Policy, US Jobs Data: What’s Sparking Market Volatility?
Recommended Read:Â The Finale of the US Elections 2024: What Lies Ahead for the Commodities Market?
Want Help On Your Trades ?
Chat with us