US Dollar Index Price Forecast: Trades lower around 99.30 ahead of US NFP data
- The US Dollar Index is down to near 99.28 in the countdown to the US NFP data for May.
- Fed officials have expressed that high US inflation is their major concern.
- Rising 20-day EMA backs more upside.
The US Dollar (USD) trades lower against its major currency peers during the European trading session on Friday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.17% lower to near 99.28 ahead of the United States (US) Nonfarm Payrolls (NFP) data for May, which will be published at 12:30 GMT.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.21% | -0.17% | -0.06% | -0.17% | -0.01% | -0.13% | -0.26% | |
| EUR | 0.21% | 0.03% | 0.15% | 0.04% | 0.20% | 0.06% | -0.04% | |
| GBP | 0.17% | -0.03% | 0.11% | -0.01% | 0.16% | 0.03% | -0.09% | |
| JPY | 0.06% | -0.15% | -0.11% | -0.10% | 0.06% | -0.07% | -0.20% | |
| CAD | 0.17% | -0.04% | 0.00% | 0.10% | 0.15% | 0.03% | -0.09% | |
| AUD | 0.01% | -0.20% | -0.16% | -0.06% | -0.15% | -0.12% | -0.26% | |
| NZD | 0.13% | -0.06% | -0.03% | 0.07% | -0.03% | 0.12% | -0.13% | |
| CHF | 0.26% | 0.04% | 0.09% | 0.20% | 0.09% | 0.26% | 0.13% |
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).
The US NFP report is expected to show that the economy created 85K fresh jobs, lower than 115K in April. The Unemployment Rate is seen steady at 4.3%. Average Hourly Earnings, a key measure of wage growth, is seen arriving lower at 3.4% Year-on-Year (YoY) from the previous reading of 3.6%. On a monthly basis, the wage growth measure is expected to have grown at a faster pace of 0.3% against 0.2% in April.
Being a part of the Federal Reserve’s (Fed) dual mandate, the US NFP data has held a significant impact on expectations toward the central bank’s monetary policy outlook. However, this time it’s different!
Recent remarks from several Federal Open Market Committee (FOMC) members have indicated that they are more concerned about bringing inflationary pressures down than supporting moderate job growth.
Last week, Minneapolis Federal Reserve (Fed) Bank President Neel Kashkari, a voting member of the FOMC, said that the major concern for the central bank now is higher US inflation than deteriorating labor market conditions. When asked about whether the central bank will hike interest rates in the October meeting, Kashkari said, “Far too soon to make prediction on when next Fed move could be.”
On Thursday, Kansas City Fed Bank President Jeffrey Schmid said that the “biggest risk facing the economy right now is inflation”, and the big question now is whether the Fed should “stay patient on rates or raise them to tamp this thing down and meet the inflation target”. Investors should note that Fed’s Schmid is not a voting member of the FOMC.
US Dollar Index technical analysis
The Dollar Index Spot trades lower at around 99.25 as of writing. However, the index holds a modest bullish bias as it stays above the 20-day exponential moving average (EMA), which is at 99.07.
Momentum aligns with this constructive setup, as the 14-day Relative Strength Index (RSI) hovers in the mid-50s, suggesting positive but not overstretched buying pressure.
On the downside, the 20-day EMA at 99.07 is the first immediate support, and a clear break below it would weaken the current positive tone and open the door to a deeper corrective move towards the May 29 low at 98.75. Looking up, the index could advance towards 100.00 if it manages to break above the June 4 high at 99.56.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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