USD Index treads water around 102.50 ahead of Payrolls

• The index alternates gains with losses in the mid-102.00s.
• US yields poised to extend the recent rally on Friday.
• US Nonfarm Payrolls takes centre stage across the pond.

The greenback, in terms of the USD Index (DXY), still appears under pressure around the 102.50 region at the end of the week.

USD Index looks at key data

The index continues to face some selling pressure following Thursday’s advance to multi-week tops above 102.80, always amidst the persistent cautiousness ahead of the release of crucial data in the US docket.

Indeed, the greenback’s price action so far falls in line with the generalized side-line trading seen in the global markets ahead of US Nonfarm Payrolls due later in the NA session.

In the meantime, US yields trade without a clear direction in the wake of the opening bell in the old continent, following Thursday’s advance to multi-month highs in the 10-year/30-year segment.

In the US data space, the economy is expected to have created around 200K jobs in July according to Nonfarm Payrolls figures, while the jobless rate is seen holding steady at 3.6% in the same period.

What to look for around USD

The index now seems to have met some decent hurdle around 102.80 ahead of the publication of the US jobs report for the month of July.

So far, the dollar has resumed the multi-day rally on the back of the strong loss of momentum in the risk-associated universe. This pronounced uptick in the dollar, however, could face extra headwinds in response to the data-dependent stance from the Fed against the current backdrop of persistent disinflation and cooling of the labour market.

Furthermore, speculation that the July hike might have been the last of the current hiking cycle is also expected to keep the buck under some pressure for the time being.

Key events in the US this week: Nonfarm Payrolls, Unemployment Rate (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in late 2023 or early 2024. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is gaining 0.04% at 102.52 and the breakout of 102.84 (weekly high August 3) would open the door to 103.54 (weekly high June 30) and finally 103.57 (200-day SMA). On the other hand, immediate contention emerges at 100.55 (weekly low July 27) prior to 100.00 (psychological level) and then 99.57 (2023 low July 13).