Key Points
- Nonfarm payrolls jumped 130,000 in January, biggest gain in over a year.
- Unemployment fell to 4.3%, prompting traders to shift rate cut bets to July.
The US Dollar Index (USDX) steadied at 96.786 on Thursday, posting a marginal 0.010 (0.01%) rise after rebounding from recent lows.
The move follows heightened volatility earlier in the week and came after stronger-than-expected US labour market data reduced the urgency for Federal Reserve rate cuts.
January’s nonfarm payrolls rose by 130,000, beating consensus and marking the largest monthly gain since 2024.
The unemployment rate dipped to 4.3%, surprising markets that had expected a flat reading at 4.4%. The data suggests a stabilising labour market and a US economy that remains resilient despite tighter monetary conditions.
In response, Treasury yields climbed, reinforcing the Fed’s current position to hold rates steady. Market pricing now implies a July start to easing, pushed back from June, with total rate cuts forecast at 50 basis points by year-end.
Technical Snapshot: Bottoming Pattern Emerging
The US Dollar Index (USDX) is currently trading around 96.786, showing minimal change from the previous session (+0.010 / +0.01%), reflecting a market in wait-and-see mode after last week’s volatility.
The chart shows a mild recovery from the recent low of 95.339, but upside momentum appears constrained, with price now hovering just beneath the short-term moving averages.
The MA5 (96.901) and MA10 (97.137) have started to flatten slightly, suggesting an attempt at consolidation, but the index remains capped below the MA20 (97.305) and MA30 (97.735), which are still angled downward—indicating that the broader bias remains bearish unless broken decisively.
From a structural perspective, the index is attempting to carve out a base around the 95.3–96.0 zone, a key support area where buyers previously stepped in.
A close above 97.30–97.50 would signal a more convincing reversal and likely target the next resistance near 99.27–99.80. On the flip side, failure to hold above 96.30 could reopen the path toward a retest of 95.339.
Eyes on Inflation Next
With jobs data out of the way, traders are now focused on the January CPI report due Friday, which could reinforce or challenge the Fed’s stance.
A hot print may further delay easing bets and give the dollar room to run, while a softer outcome would reintroduce downside risks.
The current Fed narrative remains data-dependent. While the labour market shows strength, inflation’s next trajectory will determine whether markets hold their July cut expectations or reprice sooner easing.
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