At the time of writing on Friday, the US Dollar Index (DXY) is currently at 99.50, having been limited by a false breakout and strong rejection at the 100 level. The Greenback has weakened slightly due to news of China considering tariff negotiations with the US administration. As negotiations continue, the market is eagerly anticipating the first official trade deal. In regards to the Ukraine-Russia conflict, a smaller mineral deal was signed between the US and Ukraine, without any military guarantees for Ukraine.
On the economic front, April’s Nonfarm Payrolls (NFP) release showed an increase of 177,000 jobs, slightly above the highest estimate of 171,000. This led to some initial strength in the US Dollar, but with the next NFP reading not expected until June, the market is viewing this as the last positive reading. The US Dollar Index is currently at a key technical level after a three-day winning streak, with the NFP release potentially determining its direction for the day. A continuation of the recent uptrend and a break above 100 could push the DXY higher, but even if this occurs, a technical rejection could result in a return to three-year lows.
Resistance for the DXY can be seen at 100.22, a level that previously supported the index in September 2024. A break above the key level of 100.00 would be seen as bullish, with a target of 101.90, a pivotal level in December 2023 and also a base for an inverted head-and-shoulders formation in the summer of 2024. On the downside, 97.73 is the first support level that could be tested with any significant negative news. A breach of this could lead to a further drop to 96.94, followed by 95.25 and 94.56, marking new lows not seen since 2022.