US Dollar down but not out, eyes on US CPI


  • The US dollar could be on the verge of a significant break to the downside.
  • Risk-off start to the week, however, should offer immediate support.

The US Dollar fell on Friday on the back of the US jobs report that had something for everyone. US Nonfarm Payrolls increased 261,000 last month, data showed, also offering a revision show 315,000 jobs added instead of 263,000 as previously reported. Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 120,000 to 300,000. However, the Unemployment Rate rose to 3.7% from September's 3.5%. Average hourly earnings increased 0.4% after rising 0.3% in September, but the rise in wages slowed to 4.7% year-on-year in October after advancing 5.0% in September.

DXY, an index that measures the greenback vs. a basket of currencies dropped to 110.72 from a high of 112.993. It did so despite the fed funds futures on Friday pricing in a 52.5% chance of a 75-basis-point interest rate hike next month and a 47.5% probability of a 50-basis-point increase. Reuters reported that the odds of a 75-basis-point rise went as high as 64% immediately after the payrolls data. The Fed's terminal rate, or the level at which rates would peak, slipped to 5.09% late on Friday, from about 5.2% just before the data.

China and CPi are the drivers

However, it was a risk-on mood that also helped to sink the greenback with speculation that Chinese authorities were working on plans to scrap a system that penalizes airlines for bringing virus cases into the country. This boosted investor hopes that China’s pandemic policy may soon be loosened. Nevertheless, there is a weekend report that rebuttals such news which is a positive for the greenback at the start of the week when investors will be quickly turning their attention to the US inflation data.

''Core prices likely slowed modestly in Oct, but to a still strong 0.4% MoM pace,'' analysts at TD Securities said. ''Shelter inflation likely remained the key wildcard, though we look for used vehicle prices to retreat sharply. Importantly, gas prices likely shifted from offering relief to the Consumer Price Index in recent months to contributing to it in Oct. All told, our m/m forecasts imply 7.9%/6.5% YoY for total/core prices.''

DXY technical analysis

The price is testing a key area of support but is on the backside of the micro trendline which could be bearish for the week ahead. A move below 110.80 then 109.63 and 107.80, would be significant for the outlook for forex in the final weeks of the year.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD: There is a solid support around 0.6300

AUD/USD: There is a solid support around 0.6300

The selling bias in AUD/USD remained unabated for the fourth day in a row on Wednesday, with spot putting the key 0.6300 contention zone to the test amid a recovery in the US Dollar and tariffs concerns.

AUD/USD News
EUR/USD: The inability to surpass 1.0500 could spark a deeper correction

EUR/USD: The inability to surpass 1.0500 could spark a deeper correction

EUR/USD reversed two consecutive daily advances, closing below the 1.0500 barrier following another unsuccessful attempt to challenge the YTD peaks near 1.0530 amid a decent bounce in the Greenback.
 

EUR/USD News
Gold finding buyers on intraday dips

Gold finding buyers on intraday dips

As the US Dollar continues to lose momentum, Gold prices have reversed their initial dip and reclaimed the key $2,900 per troy ounce mark—and beyond—while investors gear up for President Trump’s upcoming speech.

Gold News
Top 3 buy zones for Bitcoin as buy signal flashes on BTC price chart

Top 3 buy zones for Bitcoin as buy signal flashes on BTC price chart

Bitcoin (BTC) hovers around the $87,000 level on Wednesday after traders faced massive liquidations following the largest cryptocurrency’s crash under the $90,000 support level.

Read more
February inflation: Sharp drop expected in France, stability in the rest of the Eurozone

February inflation: Sharp drop expected in France, stability in the rest of the Eurozone

Inflation has probably eased in February, particularly in France due to the marked cut in the regulated electricity price. However, this overall movement masks divergent trends. Although disinflation is becoming more widespread, prices continue to rise rapidly in services, in France as well as elsewhere in the Eurozone.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025