56309 August, 2, 06:24:15 PM

US Dollar closes a losing week following soft NFP

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US Dollar Slumps after Weak Jobs Report

Headline: The US Dollar Index (DXY) plunged at the end of the trading week following the release of disappointing Nonfarm Payrolls (NFP) figures for April.

Key Points:

  • NFP report showed a lower-than-expected increase in jobs, raising concerns about the strength of the US economy.
  • The weak labor market data increased the likelihood of a rate cut by the Federal Reserve (Fed) in September, putting pressure on the USD.
  • Despite the bearish momentum, the DXY remains above its long-term moving averages, indicating a potential rebound in the future.

NFP Report Highlights:

Metric Value
Job Growth 175,000
Expected Growth 243,000
March Growth (Revised) 315,000
Unemployment Rate 3.9%
Wage Inflation (Average Hourly Earnings) 3.9% YoY

Impact on Markets:

  • The weak labor market figures led to a decline in US Treasury bond yields, with the 2-year yield falling to 4.80%.
  • The 5-year and 10-year yields also decreased to 4.50% and 4.58%, respectively.
  • Market expectations for a Fed rate cut by September intensified.

DXY Technical Analysis:

  • The DXY maintains a bullish bias, supported by its position above the 100 and 200-day Simple Moving Averages (SMAs).
  • The Relative Strength Index (RSI) is in negative territory, suggesting selling momentum.
  • The Moving Average Convergence Divergence (MACD) shows rising red bars, indicating a potential strengthening of bearish pressure.

Employment and Currencies:

  • Employment levels are crucial indicators of economic health, influencing the value of currencies.
  • High employment or low unemployment boosts consumer spending and economic growth, strengthening the local currency.
  • A tight labor market can also impact inflation and monetary policy, as low labor supply and high demand lead to higher wages.

Wage Growth and Policy:

  • Wage growth is a key consideration for policymakers.
  • High wage growth can lead to increased consumer spending and price increases in consumer goods.
  • Central banks closely monitor wage growth data when making decisions about monetary policy.

Central Banks and Employment:

  • The weight given to labor market conditions by central banks varies depending on their objectives.
  • Some banks, like the US Federal Reserve, have mandates that explicitly include promoting maximum employment.
  • Labor market conditions are an important factor for policymakers due to their significance in assessing economic health and their relationship to inflation.


The weak April NFP report and increased expectations of a Fed rate cut have put downward pressure on the US Dollar Index. While the DXY remains above its long-term moving averages, the technical indicators suggest a potential for further declines in the near term. Employment data and its impact on monetary policy will continue to be closely watched by investors and analysts.

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