US Dollar Index slides to two-day lows on gloomy NFP

• The Greenback reverses part of its recent pullback on Friday.
• US Nonfarm Payrolls disappointed estimates at 73K in July.
• Next on tap on the US docket will be the ISM Manufacturing PMI.

The Greenback, when tracked by the US Dollar Index (DXY), rapidly left behind the area of recent lows and slipped back to the vicinity of the 99.00 neighbourhood at the end of the week.

Door open to a rate cut in September?

Indeed, the index lost momentum after the US economy created 73K jobs iJuly, and the unemployment rate ticked a tad higher to 4.2%, while average hourly earnings--a proxy for inflation--rose to an annualiseded 3.9%.

The move lower in the buck comes amid an equally pronounced correction in US yields, which are retesting the area of multi-week lows across different maturities.

In the meantime, the recent readings from the US jobs report could reignite speculation that a rate cut by the Fed still has a chance to materialise in September.

Moving forward, investors are also expected to closely follow the release of the always-relevant ISM Manufacturing PMI, followed by the final prints of the U-Mich Consumer Sentiment gauge.

Technical space

The multi-year low of 96.37 (July 1) emerges as the next contention one for DXY in case bears regain the upper hand. Once cleared, the index might attempt a move to the February 2022 floor of 95.13 (February 4), prior to the 2022 base of 94.62 (January 14).

On the upside, the weekly ceiling of 100.25 (August 1) emerges as the immediate barrier. Further north comes the weekly peak at 100.54 (May 29), ahead of the May top at 101.97 (May 12).