US dollar index slides toward 101.00 despite NFP data

The US dollar fell across the board on Friday following the release of the US employment report and trimmed gains. The US dollar index started to decline on Thursday and accelerated on Friday after the NFP data. It was about to end the week around 101.15, marginally below the level it closed a week ago. 

The greenback failed to hold above 102.00 and pulled back despite the strong economic data from the US. Investors discount a rate hike from the Fed next week, so today’s data offered no surprise. 

According to the Labor Department, the US economy added 235K jobs in February following a gain of 238K in January. “There is nothing in the report that ought to cast doubt on the likelihood of a Fed hike next week.  The market has it discounted, and given the recent string of commentary from Governors as well as regional presidents, not to move would be destabilizing and undermine the credibility of the Federal Reserve”, said analysts from Brown Brothers Harriman. 

US NFP: A no move from the Fed would be destabilizing - BBH

Below key level

Today’s decline, pushed the DXY below a key trendline, that has been offering support since February, and also under the 20-day moving average for the first time in a month. So a consolidation around current levels could give bearish signals for the next sessions. 

To the downside, support could be seen at 101.00 (psychological), 100.70 (Feb 24 & 27 low) and 100.30/35. On the upside, the first resistance now seems to be the 20-day moving average at 101.30, followed by 101.70 (previous support) and 102.00 (psychological).