The U.S. dollar index rebounded off intra-week lows, as the U.S. dollar recovered some of its footings and made further escalation in U.S.-China tensions. But this may not be enough to stop the U.S. dollar index from posting yet another weekly loss if the U.S. non-farm payrolls report does not bring positive job numbers.
On Thursday, U.S. President Donald Trump issued an executive order that would see the banning of two Chinese tech apps in 45 days if the companies failed to find American investors to buy off their U.S. operations. Affected companies include ByteDance, majority shareholders in the TikTok video-sharing app, and Tencent Holdings Ltd, owners of the WeChat messaging app. The U.S. government alleges that the apps are loaded with spyware that transmit sensitive information of American users to the Chinese government.
Today is a big Friday in the U.S., as the much expected U.S. non-farm payroll and unemployment data will hit the news wires. Today is also the last day of sitting before the U.S. senate proceeds on a one-month recess. Investors will be watching to see if U.S. Republicans and Democrats would be able to reach an agreement on the size of the fiscal stimulus packages for households and the unemployed.
The markets are expecting an Employment Change of 1530K and an Unemployment Rate of 10.5%. An upbeat job report will be good for the U.S. dollar and could potentially boost the U.S. dollar index, but this may not be enough to override the Perry fundamentals that have pressurized both the dollar and the index in the last eight weeks.
Technical Outlook for U.S. Dollar Index
The USD index was able to bounce off the 92.50 support level In yesterday’s trading session, and this was enough to provide some fillip that has allowed for a gain of 0.48% on the day. They don’t beat employment report May allow for price rejection at the current resistance that is being tested. This resistance is located at 93.17. such a reduction would allow for a possible retest of 92.50 price level, with 91.91 and 90.17 lining up as potential support areas down the road.
On the flip side, an upbeat George fort could allow the DXY to extend its case for the day towards the resistance level located at 93.80, with 94.62 and 95.19 making a case (albeit quite weak) to become new resistance targets. However, any upsides could be seen as opportunities to sell on rallies as the overriding fundamentals continue to remain bearish.