During Friday's Asian trading session, the US dollar index (DXY) maintained its strong performance, rising for the fourth consecutive trading day, and is currently hovering around 98.90, close to its highest level in nearly a month.

As key employment data approaches, market risk appetite is converging, providing some support for the US dollar. From a fundamental perspective, investors are closely watching the upcoming US December non-farm payroll report, which is considered a crucial indicator for assessing the resilience of the labor market and the Federal Reserve's policy path.

The market generally expects that approximately 60,000 jobs will be added in December, a slight decrease from 64,000 in November, indicating that the momentum of job growth continues to slow. Previously released weekly labor force data also sent a mild signal.

Data from the U.S. Department of Labor shows that for the week ending January 3, initial jobless claims rose slightly to 208,000, slightly below market expectations but higher than the revised 200,000 of the previous week; continuing jobless claims rose to 1.914 million, reflecting a gradual increase in the number of people receiving unemployment benefits and a continued cooling of the labor market.

Regarding private sector employment, ADP data showed that employment increased by 41,000 in December, significantly lower than the market expectation of 47,000. Furthermore, the November figure was revised down to a decrease of 29,000, further reinforcing the market's assessment of a slowdown in employment growth.

Job vacancy data also showed a downward trend. In November, JOLTS job vacancy fell to 7.146 million, lower than the previous value and market expectations, indicating that corporate demand for labor continued to cool down.

On the policy front, U.S. Treasury officials recently stated publicly that the economy still has growth potential, and if financing costs decline further, it is expected to unleash stronger momentum. These statements have been interpreted by the market as an openness to further easing of monetary policy.

Regarding interest rate expectations, according to interest rate futures, the market expects a greater than 80% probability that the Federal Reserve will keep interest rates unchanged at its January meeting, making the short-term policy path relatively clear. This also helps the US dollar maintain its strength before the data release.

From a daily chart perspective, the US dollar index remains within a generally upward trend. The price has been trading above short-term moving averages for several consecutive trading days, with the 5-day and 10-day moving averages showing an upward turn, providing initial support for the index.

If the price holds above the 99.00 level, it may further test the previous area of dense resistance. In terms of momentum indicators, the RSI is in the neutral-to-strong range and has not yet entered overbought territory, indicating that upward momentum still has room to continue. In the MACD indicator, the fast and slow lines maintain a golden cross structure, and the histogram is gradually expanding, reflecting that bullish forces are in control.

Overall, the daily technical pattern is bullish, but the index is likely to fluctuate at high levels in the short term before the release of important data.

Editor's Note:

The current rise in the US dollar index reflects more of a defensive move ahead of data releases than a trend-driven one-sided market movement. The coexistence of a slowing job market and expectations of policy easing provides short-term support for the dollar, but its upside potential still depends on the actual impact of the non-farm payroll data on interest rate expectations.

Before key data is released, the US dollar index is more likely to maintain a strong and volatile pattern, and the risk of a rapid correction caused by data falling short of expectations should be guarded against.