The US Dollar Index (DXY) trades near 103 after a better-than-expected Nonfarm Payrolls report, which recorded a rise of 228,000 jobs in March, surpassing the 135,000 forecast. Federal Reserve Chairman Jerome Powell indicated inflation risks from tariffs and a cautious policy approach, despite low unemployment.
Technical analysis shows a modest climb in DXY, yet a bearish trend persists, with resistance levels at 103.50 and support at 102.61. The Moving Average Convergence Divergence (MACD) signals a sell, while the Relative Strength Index (RSI) is neutral at 35.58, indicating indecision among traders.
Nonfarm Payrolls Impact
Nonfarm Payrolls are a vital metric for assessing employment trends in the US economy, excluding the farming sector. High NFP typically correlates with a stronger US Dollar, influencing Federal Reserve monetary policy and interest rates. Conversely, a higher NFP generally negatively impacts Gold prices, as a stronger dollar reduces its appeal.
Powell’s remarks on inflation and tariffs—mentioning the likely pressures from higher import costs—shouldn’t be overlooked. They subtly point to the Federal Reserve’s continued worries about persistent inflation, even while unemployment holds at historically low levels. Despite stronger hiring data, policymakers seem reluctant to accelerate rate cuts, instead leaving open the door for holding rates steady longer than previously anticipated.
That hesitation has helped the Dollar stay afloat this week. Markets had priced in more aggressive easing in the second half of the year, but with the labour market still tight and inflation lingering above target, a shift in timing is now in motion. As we watch this recalibration, the DXY hovering near the 103 mark reflects that tug-of-war—sturdy economic indicators on one hand and hesitant policy relief on the other.
From a technical perspective, although there’s been a modest advance after last week’s data, the ongoing downward channel still paints a picture of underlying weakness. The breach resistance level at 103.50 hasn’t been broken cleanly or sustained, leaving us cautious about a sustained reversal. The MACD’s sell cue, combined with an RSI hovering just above oversold territory, underlines fading bullish momentum—if there ever was much to begin with.
Future Price Action
Volatility may return quickly if there’s another upside surprise in upcoming inflation or jobless reports. We’ve often seen short bursts of upside in the Dollar in response to stronger-than-expected data, only for sellers to return once the momentum fades. Price action over the next two weeks will need to be watched closely. Momentum traders would be well advised to keep a close eye on daily closes relative to the 103.50 mark. If resistance is finally breached with conviction—and not just temporarily—it could shift the bias back toward buying pressure.
For now, the failure to build a floor above the 50-day moving average and the confirmation of a sell signal from momentum indicators encourage us to remain cautious about meaningful upside in the near term. Price remains vulnerable to dips below support at 102.61, particularly if inflation surprises to the downside or if regional banking data sparks renewed risk sensitivity.
As we reflect on the better-than-forecast Nonfarm Payrolls, the implications are far from one-dimensional. Though jobs growth is a net positive, it’s the Fed’s reaction function that ultimately shapes the trading conditions for FX and precious metals. The stronger the job market remains without softening inflation, the more room there is for rate stability rather than reversals. That scenario spells less upside for assets that benefit from lower yields and more sustained support for the greenback—albeit in a narrow range for now.
The inverse relationship between the dollar and Gold has once again been reinforced, with recent strength in the Dollar weighing on the bullion price. Historically, even a modest strengthening in Treasury yields —which climb alongside rate expectations—applies pressure on Gold in the absence of fresh geopolitical risk. Traders could continue seeing near-term weakness for safe-haven metals unless upcoming CPI or PPI numbers imply a quicker pivot in Fed policy.
As positioning adjusts, attention should turn to open interest data and the spread between front-month futures and longer-dated contracts. We’ve seen tensions ease and then spike again quickly, especially when high-frequency indicators offer conflicting signals, which leaves the door open for noisy price action. Watching liquidity conditions and volume trends across different maturities can help identify short-term dislocations as traders shift between hedging and directional plays.
In short, while the data shows growth resilience, it’s the policy response that counts. Price action has begun telling a separate story from employment strength. We’ll continue to prioritise levels and momentum, rather than the headline figures, as our primary signal in the coming sessions.
