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Adding to the unease, inflation pressures showed modest relief, as the ISM Prices Paid Index eased to 60.9 from 62.6. Still, this wasn’t enough to shift sentiment or revive the greenback. Technically, the DXY has broken below key levels, now trading under its 200-day EMA, signaling potential for further downside toward the 101.36 and 100.86 Fibonacci extensions.
All eyes now turn to Friday’s Non-Farm Payrolls (NFP) report, with markets expecting a gain of 137K jobs and the unemployment rate to remain at 4.1%. Average hourly earnings are projected to rise 0.3% month-over-month. A miss here could reinforce recession fears and weigh further on the dollar, while a strong beat may temper dovish Fed expectations.
With Fed Chair Powell and other FOMC members scheduled to speak later in the day, the policy outlook remains fluid. But unless data surprises materially to the upside, the dollar appears trapped in a bearish cycle fueled by policy risks and deteriorating economic momentum.
US Dollar Index (DXY) – Technical Analysis
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