The U.S. dollar has paused its recent fall, and recovered 0.30% yesterday. As investors lightened their short positions to book profits ahead of the all-important U.S. non-farm payrolls report on Friday.
The jobs data supported the view that the Federal Reserve may not need to raise rates much further. Which weighted on sentiment. The dollar index rose 0.31% to 101.882, led by gains against the euro, which fell 0.44% to $1.09022.
Yesterday, the ADP National Employment report showed U.S. private employers hired fewer workers than expected in March, suggesting a cooling labor market. Private employment increased by 145,000 jobs last month, while economists polled by Reuters had forecast private employment increasing by 200,000.
The data came after Tuesday’s report showing a decline in job openings for February and on the heels of Monday’s weak U.S. manufacturing survey from the Institute for Supply Management, which also pointed to a soft employment component.
Another report on Wednesday also indicated continued economic weakness, this time in the services sector. That industry slowed more than expected in March as demand cooled, while a measure of prices paid by services businesses fell to the lowest in nearly three years.
Now, the market is waiting for the important data release on Friday. Non-farm payrolls report for March, will have a significant impact on the entire market.
Technical View – A bullish piercing line pattern is indicating for short time pullback
Since 8 March 2023, the US dollar index has been in a down trend. It posted a more than 2.20% fall, dropped from the peak 105.883 and closed at 102.594 on a monthly basis,while yesterday the greenback gained 0.30% at 101.882.
A bullish piercing line pattern was noted on the daily chart which is creating a probability for bullish momentum in days to come. Further, RSI 14 and its 9 SMA also gives positive crossover.
Both technical aspects are showing that, dollar index might recover towards 102.50-103.10. On the downside, immediate support is seen at 101.40 and a fresh bearish momentum could be expected below it. Downside level would be 101.00-100.75.