US Dollar Index falls as markets react to NFP report

• US Dollar Index slips toward 99.50 after rejection at 100.00.
• Nonfarm Payrolls beat forecast, but revisions and context weaken momentum.
• China tariff headlines add pressure on the Greenback.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of currencies, is retreating on Friday after a brief move above the 100.00 level. Despite stronger-than-expected United States (US) Nonfarm Payrolls data, the Greenback is under pressure from dovish interpretations and emerging trade headlines involving China.

Daily digest market movers: Not what was hoped for

• The US Bureau of Labor Statistics reported that Nonfarm Payrolls rose by 177,000 in April, surpassing the 130,000 consensus but lower than the revised 185,000 in March.
• The Unemployment Rate remained at 4.2%, while the Labor Force Participation Rate rose slightly to 62.6% from 62.5% in March.
• Average Hourly Earnings, a key gauge of wage inflation, increased by 3.8% year-over-year, unchanged from the prior month.
• Downward revisions for February and March payrolls reduced the total jobs gain by 58,000, diluting the upside surprise from April.
• China is reportedly open to tariff negotiations with the Trump administration, which pressured the US Dollar as traders anticipated progress.
• The US signed a minor mineral deal with Ukraine, though it has limited economic scope and lacks any defense commitments.
• Despite the NFP beat, market participants view April's print as the last potentially strong labor report before softness emerges in June.
• The Federal Reserve is still widely expected to cut rates in June, with traders pricing in over 100 basis points of easing by year-end.
• Earlier this week, the ADP employment report showed private sector payrolls rose by just 62,000, the weakest since July 2024.
• GDP for Q1 showed a 0.3% annualized contraction, driven by surging imports and weakening domestic demand ahead of tariffs.
  

Technical Analysis

The DXY  is flashing an overall bearish signal, currently trading around 99.53 with a big decline on the day. The price is moving within a range of 99.40 to 100.33. The Relative Strength Index (RSI) stands at 40.14 and is neutral, while the Moving Average Convergence Divergence (MACD) is generating a mild buy signal, suggesting divergence. Both the Stochastic %K at 59.25 and the Ultimate Oscillator at 42.86 also indicate neutral momentum. The 20-day, 100-day, and 200-day Simple Moving Averages (SMAs) at 100.27, 105.45, and 104.42, respectively, along with the 10-day and 30-day Exponential Moving Averages (EMAs) at 99.70 and 101.15, are all producing bearish signals. Support is located at 99.41, while resistance levels are set at 99.70, 99.78, and 100.27.