The USD Index faces selling pressure against its peers, following signs of cracks in US job market.
Traders are confident that the Fed will cut interest rates in the September policy meeting.
Investors await key US inflation data for August.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% lower around 97.60 during the European trading session on Monday. The US Dollar (USD) faces selling pressure as soft United States (US) Nonfarm Payrolls (NF) data for August stemmed expectations that the Federal Reserve (Fed) could cut interest rates by a larger-than-usual pace of 50 basis points (bps) in the policy meeting next month.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
According to the CME FedWatch tool, traders see a 10% chance that the Fed will reduce interest rates by 50 bps to 3.75%-4.00%, while the rest points to a regular 25 bps interest rate reductions. Before the US NFP data release, traders had fully priced in a quarter-to-a-point reduction in borrowing rates in September.
The US NFP report showed signs of cracks in job market as the employers added mere 22K fresh workers, the lowest reading seen since January 2021. The Unemployment Rate accelerated to 4.3%, as expected, from the prior reading of 4.2%.
Going forward, investors will focus on the US Consumer Price Index (CPI) data for August, which will be released on Thursday. Investors will pay close attention to the US inflation data to get cues about whether US President Donald Trump’s tariffs are prompting price pressures.
The DXY struggles to hold the Friday’s low of 97.45 on Monday. The outlook of the asset is bearish as the 100-day Simple Moving Average (SMA) near 98.67 remains a key barrier for the DXY.
The 14-day Relative Strength Index (RSI) wobbles inside the 40.00-60.00 range, suggesting indecisiveness among market participants.
Going forward, the USD Index could slide to near its three-year low of 96.38, if it breaks below the September 5 low of 97.45. More downside by the asset towards the October 2021’s low of 93.28 would become inevitable, if it breaks below 97.45.
In an alternate scenario, a recovery move by the USD Index above the September 3 high of 98.45 would allow it to extend upside towards the July 23 high of 99.42, followed by the psychological level of 100.00.
US Dollar Index daily chart
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