The US Dollar maintained its position following mixed NFP data

The US Dollar Index (DXY), which measures the US Dollar against a basket of six major currencies, regained strength on Friday after the mixed August Nonfarm Payrolls (NFP) data. Although the likelihood of a 50 basis point rate cut by the Federal Reserve (Fed) in September remains significant, Fed officials may not fully support it at this time.

Despite favorable economic indicators, market expectations for aggressive monetary policy easing might be overstated. Current growth rates are above the long-term trend, suggesting that the market may be overestimating the need for such measures. However, a 25 basis point cut appears to be a certainty.

Daily Market Digest: US Dollar Rebounds as Markets Process Mixed NFP Data

• The US Dollar maintained its position following a weaker-than-expected August NFP report, which recorded 142,000 new jobs versus a forecast of 160,000.
• Despite the miss on job creation, the Unemployment Rate decreased to 4.2% as expected, and Average Hourly Earnings increased by 3.8% YoY, exceeding predictions.
• The likelihood of a 50 basis point rate cut by the Fed in September remains at 40%, but a 25 basis point cut is now widely anticipated.
• After the data release, Chicago Fed President Austan Goolsbee noted that the Fed is beginning to align with the market's expectations regarding rate cuts.
• However, Goolsbee downplayed the prospect of a larger rate cut in September.

DXY Technical Outlook: Bears Remain in Control, Resistance at 101.60

Technical analysis indicates a bearish outlook for the DXY index, with indicators consistently showing negative signals and bearish dominance. A rebound above the 20-day SMA, currently around 101.60, could suggest a potential shift in market sentiment.

Support Levels: 101.30, 101.15, 101.00

Resistance Levels: 101.60, 102.00, 102.30