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US Dollar Index looks volatile around 97.50 on NFP

  • DXY keeps the mid-97.00s following poor Payrolls figures.
  • The US economy added 145K jobs in December.
  • The Unemployment rate remained unchanged at 3.5% last month.

The greenback, in terms of the US Dollar Index (DXY), keeps daily gains in the 97.50 region despite disappointing results from December’s Payrolls.

US Dollar Index stays close to 2020 highs

The index is on the way to close the first week of the year with gains, managing to not only regain the 97.00 mark in past sessions but also print so far yearly highs in the proximity of 97.60.

The dollar stayed within the positive territory on Friday despite Non-farm Payrolls came in short of expectations during December. In fact, the US economy created 145K jobs during last month, below the 164K forecasted; the jobless rate stayed unchanged at multi-decade lows at 3.5% and wage inflation lost some upside traction, expanding 0.1% inter-month and 2.9% over the last twelve months.

In the meantime, the buck based its positive performance this week in diminishing concerns in the Middle East, persistent weakness in its rivals, improvement in US yields and positive results from domestic indicators (excepting today’s Payrolls).

What to look for around USD

The index reclaimed the 97.00 mark and pushed further north to the 97.60 area, or new 2020 highs, helped by the rebound in yields, dissipating concerns in the Middle East and positive results from the US docket. In the meantime, geopolitics – with US and Iran in centre stage – is expected to dominate the headlines for the time being seconded by the imminent sign of the ‘Phase One’ deal with China. Further out, the constructive view on the dollar remains unaltered and stays underpinned by the so far ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is gaining 0.08% at 97.49 and a breakout of 97.58 (2020 high Jan.9) would open the door to 97.69 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, initial contention is expected at 97.18 (21-day SMA) seconded by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop).

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