US Dollar continues to stretch higher following NFP-inspired rally – by eren_fxstreet DollarIndex UnitedStates Macroeconomics SEO Technical Analysis
US Dollar Index stays in positive territory above 104.00.The US Dollar holds its ground to start the new week., which tracks the USD's valuation against a basket of six major currencies, stays in positive territory above 104.00 after having gained more than 0.5% on the back of the upbeat May jobs report from the US on Friday.
Commenting on the US jobs report, "is the US economy experiencing a soft landing? According to the latest Nonfarm Payrolls, the job market is slowing down to a "Goldilocks level" – not too hot nor too cold," said FXStreet Analyst Yohay Elam. "For markets, it means ongoing growth but with lower inflation and interest rates. For the US Dollar, it means the path of least resistance is down.
"There's likely enough pockets of softness in this report for the FOMC to pass on raising rates at the next meeting, though another strong payrolls gain in June, coupled with another disappointing inflation report, could set the stage for a rate increase in July," economists at the Bank of Montreal said regarding the potential impact of the labor data on the Fed's policy outlook.
On the downside, bearish pressure could increase if DXY drops back below 104.00. In that scenario, 103.50 could be seen as initial support before 103.00 .The US Federal Reserve has two mandates: maximum employment and price stability. The Fed uses interest rates as the primary tool to reach its goals but has to find the right balance. If the Fed is concerned about inflation, it tightens its policy by raising the interest rate to increase the cost of borrowing and encourage saving.
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