Back to Markets
Forex● Neutral
DXY Rally Stalls at Downtrend Resistance: CPI Next
Soft payrolls data shifts Fed expectations, pulling forward the first cut to September. DXY holds above 50-day MA but faces a make-or-break zone. Wednesday's CPI decides.
Continue with
The US dollar's rally from May lows ran into a hard ceiling this week. DXY touched long-term downtrend resistance and then stalled after softer-than-expected payrolls data trimmed expectations for near-term Fed tightening.
The index climbed roughly 3% from the May low before hitting that zone. That advance had been driven by repricing of the Fed's rate path. Markets had moved toward pricing in one more hike and a later first cut. Friday's jobs print changed that calculus. Nonfarm payrolls came in below consensus, and the prior two months were revised lower. The market responded by pulling forward the expected first cut to September. The US Dollar Slides After Softer Jobs Report Eases Fed Hike Fears covers the immediate aftermath.
That shift in rate expectations is the immediate headwind for the dollar. The rally had been built on the idea that the US economy was running hot enough to keep the Fed on hold or even leaning toward another hike. A cooling labor market undermines that narrative. The May-June gains are at risk if the data keeps softening.