Key Points
- USDX is trading near the 99.44 area after pulling back from the recent high around 99.57 as traders await key US labour market data.
- The dollar has gained support from recent shifts in Federal Reserve expectations, while traders monitor whether momentum can continue.
- Markets are closely watching the August Nonfarm Payrolls (NFP) report, with the data expected to provide further clues on the strength of the US labour market.
- Wage growth expectations and Treasury yield movements remain key drivers for the US dollar and broader market sentiment.
Market Move
USDX traded near the 99.44 area after moving between the session high of 99.57 and low of 99.44, as traders balanced recent dollar strength with caution ahead of the upcoming nonfarm payrolls report.
The dollar has gained support from shifting Federal Reserve expectations, with markets reassessing the outlook for future interest-rate decisions.
However, momentum has slowed as traders await fresh labour market data. The upcoming NFP release could provide further insight into the strength of the US economy and influence the next direction for the dollar.
Why Traders Are Watching
The US labour market remains a key factor influencing Federal Reserve policy expectations and the dollar outlook.
With markets reassessing the timing of future rate decisions, traders are closely monitoring economic data that could provide further clues on the direction of monetary policy.
Key factors being monitored include:
- Nonfarm payrolls: A stronger employment report could support USDX by reinforcing expectations for tighter monetary policy.
- Wage growth: Higher wage increases may reinforce inflation concerns and influence Fed expectations.
- Federal Reserve outlook: Changes in monetary policy expectations remain a key driver for dollar movements.
- Treasury yields: Higher yields could provide a boost for the US dollar.
Key Trading Levels
| Price Level | What Traders Are Watching |
| 99.57 | Session high and immediate resistance area |
| 99.5 | Psychological level and short-term pivot |
| 99.44 | Current trading area and immediate support |
| 99.43 | Session low and downside support |
| 99.3 | Potential support zone if selling pressure increases |
USDX is trading near the 99.44 area after retreating from the 99.57 resistance zone.
A move above 99.50 could indicate renewed buying interest, with a break above 99.57 potentially opening the way towards further recovery.
On the downside, a break below 99.43 could increase selling pressure and expose the 99.30 support area.
Bullish and Bearish Setups
| Setup | Trigger | Potential Market Reaction |
| Recovery Attempt | Hold above 99.43 | USDX may retest 99.50 resistance |
| Bullish Breakout | Break above 99.57 | Momentum could strengthen towards higher levels |
| Range Consolidation | Hold between 99.43 and 99.57 | USDX may trade sideways ahead of NFP |
| Bearish Breakdown | Fall below 99.43 | Selling pressure could increase towards 99.30 |
The bullish scenario depends on USDX maintaining support above 99.43 and recovering towards the 99.50–99.57 resistance zone. A break above 99.57 could signal renewed dollar strength.
The bearish scenario becomes more relevant if USDX falls below 99.43, which may indicate weakening momentum and increase the risk of further downside.
Disclaimer
The price levels and market scenarios above reflect the author’s assessment at the time of writing. They do not represent financial advice or an official recommendation from VT Markets. Traders should conduct their own analysis and manage risk carefully.
USDX Prediction: Will NFP Drive the Next Dollar Move?
USDX’s next move will likely depend on whether upcoming labour data supports current Federal Reserve rate expectations.
The August NFP report is forecast to rebound to +55K, following July’s -23K reading, as markets assess whether the US labour market is regaining momentum. Average hourly earnings are expected to rise 0.3% month-on-month, with stronger wage growth potentially keeping inflation concerns elevated.
The dollar’s recent strength has been supported by shifting Fed expectations following Warsh’s hawkish comments. A stronger-than-expected employment report or firmer wage growth could reinforce expectations for tighter monetary policy and support further USDX strength.
Conversely, weaker labour data could reduce rate-hike expectations and weigh on the dollar. If USDX maintains support above the 99.43 level, the index could attempt to recover towards the 99.50–99.57 resistance zone.
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FAQ
What factors influence USDX movements?
USDX is influenced by factors including Federal Reserve policy expectations, US economic data, Treasury yields and movements in major currencies.
Why is NFP important for USDX?
Nonfarm payrolls provide insight into US labour market conditions and can influence expectations for Federal Reserve policy. A stronger-than-expected report may support the dollar by increasing expectations for tighter monetary policy.
How does wage growth affect the US dollar?
Stronger wage growth can increase inflation concerns, which may influence expectations for interest rates and impact demand for the US dollar.
Can USDX be traded as a CFD?
Yes. USDX CFDs allow traders to speculate on dollar index price movements without owning the underlying asset, with the ability to take positions in both rising and falling markets while applying appropriate risk management.
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