DXY Bounces into Volatility Ahead of NFP

The US Dollar Index (DXY) is set for another potentially volatile month in September, as it rebounds towards resistance around 100-101. Historically, the DXY has shown minimal directional bias during this time period, with average returns of just +0.1% and a 56% win rate favoring bulls.

However, volatility has been elevated during the third most volatile month of the year, according to seasonality analysis. This is particularly true around the release of Non-Farm Payrolls (NFP), which has produced an average return of just -0.01% and a median of -0.02%, with the dollar falling 52.7% of the time.

Traders are on high alert for further clues on Fed policy, and the NFP release is expected to deliver another show. The daily chart shows traders trying to bid DXY towards 100, but unless it goes into bullish overdrive soon, a breakdown from its rising wedge formation may be imminent.