US Dollar Index probes two-week downtrend above 101.50, US NFP eyed

• US Dollar Index licks its wounds around monthly low, sidelined of late.
• Reassessment of Friday’s US inflation data joins bank holiday to trigger corrective pullback.
• US employment figures, ISM PMIs can allow buyers to return.

US Dollar Index (DXY) remains pauses a fortnight-old downward trajectory, bounces off a monthly low, during Monday’s sluggish Asian session. That said, the greenback gauge seesaws around 101.70, after renewing the monthly low around 101.43 the previous day.

The DXY rebound could be linked to the market’s inaction amid the US bank holiday, as well as fresh chatters of the need for faster rate hikes by the Fed, considering the latest inflation data. Following the Fed’s preferred inflation gauge, namely the Core PCE Price Index, The Times came out with an analysis suggesting inflation puts further pressure on the Fed to lift interest rates.

The greenback gauge refreshed its monthly low on Friday after the US data concerning consumption, income and inflation came in mixed for April. The US Personal Consumption Expenditure (PCE) data came in mixed for April, mostly downbeat, as the Core PCE Price Index matched 4.9% YoY forecasts versus 5.2% prior. Further, Personal Income rose less than expected but the Personal Spending improved.

Traders previously cheered the risk-on mood by fueling the Wall Street benchmarks but kept the bond yields intact. It’s worth noting that the S&P 500 Future print mild gains but the US 10-year Treasury yields stay unchanged at 2.74% amid the US Memorial Day.

Moving on, a light calendar and bank holiday in the US will restrict the market moves but the risk catalysts may entertain traders. Above all, this week’s US jobs report for April may also help the greenback gauge to pare the latest losses, amid hopes of firmer prints.

Technical analysis

Although a clear downside break of the monthly low, around 102.35, directs DXY bears towards the 50-DMA level near 101.40, any further downside remains doubtful as the RSI has speedily dropped towards the oversold territory on the shorter timeframes.