US Dollar Forecast: DXY Gains After Strong Jobs Data Reduces Fed Cut Hopes

Dollar Gains After Strong Jobs Data as Fed Cut Hopes Cool

The U.S. dollar advanced against major peers Thursday after stronger-than-expected June payrolls signaled labor market resilience, reducing the likelihood of a near-term Federal Reserve rate cut. The dollar’s gains were supported by higher Treasury yields, reinforcing its bid across G10 pairs.

At 15:00 GMT, DXY is trading 97.122, up 0.348 or +0.36%.

Fed Rate Cut Bets Pull Back as Payrolls Beat Forecasts

U.S. nonfarm payrolls increased by 147,000 in June, beating the 110,000 consensus, with the unemployment rate edging down to 4.1%. This eased concerns of a softening labor market following weaker ADP private hiring data earlier in the week.

Treasury yields rose in response, with the 2-year yield climbing 9.5 bps to 3.884% and the 10-year yield up 4.9 bps to 4.342%, reflecting a repricing in Fed cut expectations. The dollar advanced 0.77% to 144.780 against the yen and 0.58% to 0.797 against the Swiss franc, while the euro slipped 0.47% to $1.1743.

Trade Tensions with Vietnam and Tariff Headlines in Focus

Trade developments remained in focus after former President Trump announced a deal with Vietnam, imposing a 20% tariff on Vietnamese imports and a 40% levy on goods transshipped through the country. The Vietnamese dong fell to a record low, with analysts expecting the central bank to allow gradual depreciation to offset export tariff burdens.

Talks with Japan and South Korea showed limited progress, adding to global trade risks that could influence safe-haven flows and support the dollar.

Treasury Market and Fiscal Headlines: Watching Deficit Expansion

The advance of Trump’s $3.3 trillion deficit bill, which passed the Senate and returned to the House, is being monitored for long-term debt sustainability concerns but could provide near-term fiscal stimulus, indirectly supporting the dollar’s firmness against peers.

DXY Chart: Can the Dollar Hold Above 97.000?

The DXY is currently trading near 97.133 after bouncing from the recent 96.377 low, with immediate resistance at 97.400 and stronger resistance at 97.685. The 50-day SMA at 99.100 remains a key upside pivot, while 96.377 and the psychological 95.137 remain the downside support levels.

The structure reflects that while the broader trend remains under the 50-day SMA, the recent bounce aligns with higher Treasury yields and a cooling in Fed cut expectations. Holding above 97.000 could open a push toward 97.685 and 98.000, while a close below 96.377 would expose 95.137 as the next level for bears to target.

Market Outlook: Dollar Retains Firm Tone

Stronger jobs data and rising Treasury yields support the DXY’s firmness in the near term, with the July FOMC now less likely to deliver a cut unless inflation or labor data deteriorate sharply. Traders will watch upcoming inflation prints closely, but dips in DXY may remain supported, keeping the index biased higher toward the 97.685–98.000 zone as long as 96.377 holds.

More Information in our Economic Calendar.