The USD Index may have gained yesterday after the ADP private-sector data showed an addition of nearly a million jobs. Public sector jobs did not return as expected in May, as revealed by the latest NFP data.
The addition of only 559K jobs where 645K was expected did not help the USD Index, despite the drop in the unemployment rate from 6.1% to 5.8%. The Labor Force Participation Rate was relatively unchanged at 61.6%.
The data was a disappointment as it reinforces the Fed’s position that the jobs were not returning in tandem with the economy as to warrant an earlier rate tightening or tapering. The USD Index is down 0.46%, reflecting the numbers’ dampening effect on the market.
Technical Outlook for USD Index
The disappointment of Friday’s jobs numbers has allowed the USD Index to lose nearly of all of Thursday’s gains, having been rejected at the 90.503 resistance. The pullback is now aiming for the 90.00 psychological support. If this level fails to hold, the DXY could retreat towards 89.501. Additional support resides at 89.189, below which the USD Index paints new 2021 lows.
On the other hand, a recovery in price needs to break past 90.503 to restore the breakout move from the falling wedge truncated by the jobs data. If there is success here, the 90.965 becomes an additional target. A further advance allows 91.26 and 91.50 to line up for consideration as potential future targets for bulls.