US Dollar in Focus as Traders Await Non-Farm Payroll Numbers on Friday

After weaker than expected ISM manufacturing PMI data in the US, investors will shift their focus on Non-Farm payroll report on Friday.
Bilal Jafar

The Dollar Index (DXY) took a major hit on Monday after weaker than expected ISM manufacturing PMI data. The Greenback fell against major currencies on the first trading day of the week. The DXY fell below the key level of 98.00 in the morning US session on December 2. The Wall Street is expecting a strong report for November with Non-Farm payroll reading higher than the 128K in October. The unemployment rate is expected to stay at 3.6% with a slight increase in average hourly earnings.

Mixed messages and conflicting signals on the US-China trade front have placed investors on an emotional rollercoaster ride. Under such circumstances, market players await US Non-Farm payroll numbers for future direction. A stronger than expected NFP report and an increase in average hourly income will be helpful to repair some damage done by the weaker than expected PMI data.

US Dollar remained under pressure against CHF, GBP, and JPY. The Greenback erased all of its gains from the previous week after the disappointing PMI data. Upcoming NFP numbers and clarity on the fate of a US-China phase one trade deal will decide the future direction of the US Dollar. As of writing, the USDCHF is hovering around 0.98690, USDJPY is currently trading around 108.540. The GBPUSD is currently trading around 1.29827 as bulls are eyeing a break above 1.30000.


On the technical side, USDJPY on the hourly timeframe has been following a downtrend since December 2. The price dipped below the key level of 109.000 and registered the lowest level of the period under study at 108.533 on 03 December. As of writing, the price is hovering around 108.540 with negative Moving Average Convergence Divergence (MACD) and Momentum below the 100 level. The price is currently trading below the 50-period simple moving average with Relative Strength Index (RSI) way below 50 level which supports the recent bearish price move. However, traders must stay cautious as the RSI level already dipped below the oversold area. Resistance level lies at 109.725 while the support level lies at 108.533. Although bears are trying to push the price below the key mark of 108.000, a strong Non-Farm Payrolls report and a close above the psychological level of 109.000 could strengthen the argument for further bullish movements.

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