Dollar Bouncing Back on Friday
The US Dollar is bouncing back on Friday, likely a short-covering rally ahead of the headline NFP release due later today. The greenback has been heavily sold on the back of the sweeping US tariff announcements made earlier in the week with the DXY down more than 3% at the week’s lows yesterday before bouncing back today. Despite fears that tariffs will lead to fresh inflationary pressure, USD has fallen on heavily diminished US growth prospects as a result of the tariffs with recession fears taken centre stage.
USD Risks
Looking ahead, there is still plenty of downside risk for the Dollar if we see any further weakness in today’s US labour market data. Any undershooting of forecasts today will no doubt put the focus back on recession risks, seeing USD coming under fresh selling pressure as investors turn to safe-havens amidst the current market turmoil.
Today’s Forecasts & Market Implications
On the number front today, the market is looking for the headline NFP to print 137k down from 151k prior with wages to hold at 0.3% and the unemployment rate to hold at 4.1%. Given the current rebound in USD, any upside surprise today should see further short-covering into the weekend. However, if we see any undershooting of these projections, USD is vulnerable to a fresh decline as near-term Fed easing expectations ramp up.
Technical Views
DXY
The sell off in DXY has stalled for now into the 101.91 level and the bear channel lows. The key pivot now is the 103.40 level with bulls needing to get back above there or risk a continuation of the channel lower towards the 100.38 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.