The US Dollar (USD) surged to 103.90 on the Dollar Index (DXY) chart, buoyed by a robust labor market report that has dispelled expectations of a March rate cut. Federal Reserve Chair Jerome Powell reinforced this sentiment, expressing skepticism about a rate cut in March and emphasizing the central bank‘s commitment to monitoring incoming data to determine the timing of any easing cycle.
Key Market Highlights:
Labor Market Report: The US labor market exhibited strength, with January’s unemployment rate holding steady at 3.7%, below the expected 3.8%. Nonfarm Payrolls significantly surpassed projections, indicating robust job market growth, with 353,000 additional jobs created against an expected 180,000. Average Hourly Earnings for January exceeded consensus, rising by 0.6% MoM, and Annual Average Hourly Earnings for 2024 reached 4.5%, surpassing the previous 4.4%.
Bond Yields Surge: US bond yields experienced a sharp increase, with 2-year, 5-year, and 10-year bonds trading at rates of 4.38%, 4.00%, and 4.05%, respectively.
Market Expectations: The CME FedWatch Tool indicated a significant shift in market expectations, with the probability of a rate cut in March plummeting to 20%.
Technical Analysis – DXY Chart:
On the daily chart, the US Dollar Index (DXY) exhibited resilience, jumping above the crucial 200-day Simple Moving Average (SMA). The Relative Strength Index (RSI) displayed a positive slope in positive territory, suggesting a build-up of buying momentum. The Moving Average Convergence Divergence (MACD) supported this momentum with rising green bars. However, mixed signals arose from the Simple Moving Averages (SMAs), as the index remained below the 100-day SMA, indicating a bearish hindrance despite being above the 20-day and 200-day SMAs.
As the US Dollar faces contrasting signals, investors closely watch the indicators and key levels for potential shifts in market dynamics amid the evolving economic landscape.
