- DXY trades near the 104.20 zone after mixed reaction to PMI and Job Openings data.
- Manufacturing activity contracts and hiring slows, keeping stagflation risks in play.
- Resistance seen around 104.84 with support clustering near 104.13.
The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, trades near the 104.20 area on Tuesday, showing little directional bias after a series of soft US economic data releases. A weaker-than-expected ISM Manufacturing PMI print, a decline in Job Openings, and cautious Fed commentary paint a murky outlook for the Greenback. Despite modest gains, the technical backdrop remains fragile as traders look ahead to further macro drivers later this week.
Daily digest market movers: US Dollar steadies as cracks widen in data
- US ISM Manufacturing PMI fell to 49 in March from 50.3 in February, missing the 49.5 forecast.
- The sector’s Employment Index dropped to 44.7, its lowest since last July, signaling a faster pace of job cuts.
- The Prices Paid Index surged to 69.4 from 62.4, pointing to renewed inflationary pressure amid tariff-linked supply issues.
- Chair of ISM’s Business Survey Committee said demand remains confusing for businesses with destaffing and production cuts ongoing.
- US JOLTS Job Openings dropped to 7.56 million in February, below expectations and confirming labor market softening.
- Total hires and separations remained broadly unchanged at 5.4 million and 5.3 million, respectively.
- Fed’s Barkin warned that current data is hard to read, calling it “wrapped in a thick fog.”
- Despite declining Job Openings, the Fed’s updated SEP projects a stable Unemployment Rate near 4.4% in 2025.
- Currency markets appear less reactive to tariffs, focusing more on signs of economic stagnation or contraction.
- Traders are increasingly cautious ahead of Friday’s Nonfarm Payrolls (NFP) report.
- CME data shows low odds of a May rate cut, but dovish pressure could build with further data disappointments.
- The DXY continues to drift between 104.00 and 105.00 as the market searches for conviction.
- Risk sentiment remains fragile with traders wary of additional downside in equities and bonds.
Technical analysis
The US Dollar Index is posting modest gains on Tuesday, but the broader technical outlook remains bearish. The Moving Average Convergence Divergence (MACD) still signals a potential bullish crossover, yet longer-term indicators such as the 100-day and 200-day Simple Moving Averages (SMA), as well as the 30-day Exponential Moving Average (EMA), continue to flash sell signals.
The Relative Strength Index (RSI) at 76.92, alongside stochastic readings, points to overbought conditions, while the Awesome Oscillator remains neutral. The 20-day SMA offers mild bullish support. Resistance is located at 104.435, 104.841 and 104.847, while support lies near 104.169, 104.165 and 104.128.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
