Dollar Recovery Stalls as NFP Data Reignites Dovish Fed Bets
The US Dollar Index (DXY) saw a slight recovery to near 99.70 on Monday, but traders and analysts remain cautious about its prospects following the weak US Nonfarm Payrolls (NFP) data released last Friday.
According to ING strategists, the market has priced out hawkish Fed bets after the NFP data came in lower than expected, with a decline of 20,000 jobs reported. They note that this is not just a one-time event, but also a significant revision downward for previous months, leaving average payroll growth at just 20,000 over the past three months.
As a result, ING reiterates its dovish Fed call and bearish bias on the Dollar, pointing out that there remains ample room for further dovish repricing to harm the Dollar. They expect the upcoming US Consumer Price Index (CPI) data for July to provide another dovish signal for the Fed.
In terms of technical analysis, the DXY holds a near-term bearish bias as price continues to hold below the 20-day Exponential Moving Average (EMA) at 100.35. The 14-day Relative Strength Index (RSI) hovers near 37, indicating weak momentum but not yet oversold.