U.S Dollar Bulls Run Out Of Steam As They Await Payrolls Report

Despite tight trading ranges, the dollar edged lower at the third trading session, as traders were hesitant to take strong positions ahead of the U.S. payrolls report.

At the time of writing this report, the Dollar Index, which tracks the greenback against six other currencies, was little changed at 92.

The greenback has now lost more than 1% from a 15-week peak it reached a fortnight ago, as U.S. yields and expectations for a U.S. rate hike have receded and investors have questioned the strength of the economic recovery.

In particular, the rise of the Delta variant of COVID-19 is seen as a sign that the 10-year yield will decline in the future.

The dollar index fell to a low of 91.775 on Friday, its weakest level since June 28, after Federal Reserve Chairman Jerome Powell said interest rate increases are still a long way off.

As a result, the U.S dollar gauge shows a short-term bearish pattern in addition to portraying a downtrend over the past three days.

The bearish move could be defied if an upside break of the immediate resistance near 92.15 sets off a pullback targeting June’s high around 92.45.

In addition to the official jobs report, Friday’s report will provide some insight into the extent to which the recovery has lasted in the United States. Most economists predict a 900,000 increase in employment, the largest increase in 11 months.

Still, there is a possibility that the dollar will rebound soon as many currency analysts expect even more gains through the end of the summer with the Covid-19 delta variant becoming more widespread.

Investors are strengthening their cash reserves and hedging against future pandemics by buying Treasuries, tech stocks, and the dollar, signaling a defensive stance.