The USD Index (DXY) retreated to 3-month lows after disappointing NFP numbers showed that US employment is yet to recover sufficiently to warrant hawkish Fed action.
The NFP showed an employment change of 266K (consensus of 990K) and a rise in the unemployment rate from 6.0% to 6.1%. This reading sealed a lousy week for the greenback.
US long-term bond yields also fell to 2-month lows as the NFP shows that the recovery in employment is still below what the US Federal Reserve needs to see before considering a rate hike.
The USD Index dropped for the 3rd straight session, hitting 3-month lows around 90.40 before pulling back upwards a little.
US Dollar Index Levels to Watch
A rejection and pullback triggered the recent decline at the channel’s broken lower border. This event occurred at the 91.261 resistance.
Today’s decline confirms the breakdown of the 90.965 support, with a violation of the 90.503 support. A 3% penetration close below 90.503 ensures the breakdown of that level, targeting 90.228 in the first instance. 90.00 and 89.841 are additional downside targets.
On the flip side, a bounce from 90.503 allows bulls to recover some ground, with 90.965 being the initial objective. Above this level, 91.261 and 91.50 become additional price objectives to the north, as does the 92.00 psychological resistance level.