DXY Volatility Peaks Ahead of NFP as Seasonality Offers Little Guidance

The US dollar index (DXY) is poised for potential volatility in September due to seasonality and upcoming nonfarm payrolls (NFP) data, despite its recent rebound towards resistance around 100-101.

Average September returns for DXY are minimal at 0.1%, with the median return even lower at 0.05%. While this suggests a slight edge for bulls, the directional bias remains weak, and volatility has historically been elevated in this month.

The NFP data is particularly noteworthy, as it tends to increase volatility rather than provide a reliable directional signal. The index has fallen 52.7% of the time on NFP release day, with an average return close to flat.