The US Dollar Index is still under pressure.

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The US dollar is approaching 95.00 ahead of the NFP. 

DXY lowers the weekly leg to the 95.15/10 band. 

US yields are trading in a mixed bag towards the conclusion of the week. 

January Nonfarm Payrolls are the next relevant item on the agenda. 

When measured by the US Dollar Index, the greenback alternates between gains and losses at the lower end of the weekly range at 95.30. (DXY). 

The US Dollar Index is currently focusing on statistics. 

The index trades without a clear direction towards the conclusion of the week, threatening to breach the critical support around the 95.00 yardstick amid varied US rates and continuing risk-on mood.

It is worth noting that the greenback has escalated losses to the low-95.00s in recent hours in reaction to Chairwoman Lagarde’s unexpectedly hawkish remark at the ECB event on Thursday. Indeed, the central bank now sees the likelihood of tightening monetary conditions (through rate rises) later in the year (September? December?) as opposed to earlier estimates that suggested this scenario in late 2023. 

Meanwhile, the dollar is likely to maintain its cautious tone ahead of crucial Nonfarm Payrolls and Unemployment Rate numbers due later in the NA session. Consensus predicts that the economy created “just” 150K jobs in December, owing to the impact of the Omicron version.

What to look for around USD

The dollar fell to about 95.00 at the close of the week, as market players appeared to be processing the ECB’s more aggressive message from Thursday’s meeting. Some of the causes for the recent big reversal in the dollar may be found in the improved mood in the risk-associated universe and dormant US rates (despite navigating the upper end of the recent range). However, the greenback’s positive outlook is projected to stay unaltered in the long run, supported by rising rates, persistently raised inflation, supportive Fedspeak, and the steady pace of the US economic recovery.

Eminent issues on the back boiler: The Fed’s rate hike plan for this year. Under Biden’s administration, there has been a trade war between the United States and China. Problems with the debt cap. Increasing geopolitical effervescence in relation to Russia and China. 

Relevant levels for the US Dollar Index 

The index is now down 0.04 percent at 95.31, and a break over 96.08 (55-day SMA) would open the door to 97.44 (2022 high Jan.28) and eventually 97.80. (high Jun.30 2020). On the other hand, the next down barrier appears to be 95.13 (weekly low Feb.4), followed by 95.00 (round level), and then 94.62. (2022 low Jan.14).

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