Dollar Dips on Soft Jobs Data but Yields Keep It Afloat
The US Dollar Index faced a setback after September’s nonfarm payrolls report showed a significant miss, with only 29,000 new jobs added and the unemployment rate rising to 4.2%. Traders scaled back expectations for a Fed rate hike in October, but elevated US yields continue to support the dollar’s appeal. Despite softer labor market data, higher yields and strong US growth keep the dollar in a favorable position.
The euro is grappling with fiscal concerns, particularly in France, where government bond sell-offs have raised doubts about Paris’ ability to stabilize public finances. The spread between French and German 10-year bonds reached levels last seen during the eurozone’s sovereign debt crisis. Meanwhile, ECB policymaker Joachim Nagel emphasized a data-dependent approach, with inflation expectations suggesting potential further tightening.
Sterling is caught between a hawkish Bank of England and concerns over rising UK fiscal spending. The BoE anticipates further energy cost inflation, which may require more policy tightening, with market expectations for a hike in November. The UK economy grew 0.5% in Q2, but public finances overshot estimates, adding uncertainty ahead of the October 28 budget.
The US Dollar Index (DXY) is currently trading at 102.18, with key resistance levels at 102.49, 102.70, and 102.95. Support levels include 101.76, 101.49, and 101.16. Technical indicators suggest bullish momentum, with the RSI in positive territory.
GBP/USD is trading around 1.3230, with support at 1.3180 and resistance at 1.3250. A break above 1.3250 could open the door to 1.3294 and 1.3339, while a break below 1.3180 would target 1.3147 and 1.3116. The RSI remains below 50, indicating weak bullish momentum.
EUR/USD is trading at 1.1200, with support at 1.1090 and resistance at 1.1225. A break below 1.1090 could see prices drop to 1.0945, while a rise above 1.1225 would target 1.1331. The RSI has moved into oversold territory, but the bearish trend remains intact.