. US Dollar Surges: Stellar NFP Performance Boosts Market Rally

US Dollar Surges: Stellar NFP Performance Boosts Market Rally

US Dollar Surges: Stellar NFP Performance Boosts Market Rally

07 Jun 2024

The US Dollar surges after a stellar NFP performance

  • The US Dollar surges across the markets, rallying broadly.
  • Any hopes for a Fed rate cut in June or July are fading, with even September looking uncertain.
  • The US Dollar Index rises sharply from just above 104.00, continuing its upward momentum.

The US Dollar strengthens following a positive surprise in the Nonfarm Payrolls figure, reaching 272,000, surpassing even the highest economist estimate of 258,000. In recent days, expectations of a rate cut from the US Federal Reserve in September had been growing, but this possibility now seems unlikely. The question now arises whether there will be any cuts at all in 2024, as these numbers do not suggest a necessity or demand for cuts from the Fed.

All economic data has been released, allowing markets to begin analyzing the numbers. Federal Reserve Governor Lisa Cook is currently speaking at the Girls Global Academy 2024 Commencement Ceremony at the University of the District of Columbia in Washington, D.C. However, it is not anticipated that her speech will contain any policy guidance information.

US Dollar Technical Analysis:

The US Dollar Index (DXY) is nearing a decline below the 104.00 level. There have been brief dips below this threshold in recent days, but currently, there is still considerable buying interest in this area. The key question is the sustainability of this buying interest, and if the Nonfarm Payrolls (NFP) data falls below the lowest projection, it could trigger a significant reaction.

To the upside, the DXY encounters initial resistance at the confluence of the 200-day Simple Moving Average (SMA) and the 100-day SMA at 104.44. Beyond that, the crucial level around 104.60 becomes relevant. Currently, the upper boundary is observed around 105.00, where the 55-day SMA aligns with this round figure, along with the peak from recent weeks at 105.08.

To the downside, the 104.00 significant figure appears to be providing support. If breached, the next potential declines to monitor are at 103.50 and possibly even 103.00. Given that the Relative Strength Index (RSI) has not yet reached oversold territory, further downward movements remain possible.