US Dollar Forecast: Position closing ahead of CPI and Non-Farm Payroll data releases will lead to a lower US dollar index.
2026-02-10 00:11:51
The US dollar index fell during Monday's (February 9) US trading session as traders closed out positions ahead of key data releases this week: Wednesday's US non-farm payrolls report and Friday's consumer inflation data. Both reports will influence the Federal Reserve's next interest rate decision in March. Today's market action suggests that the data may be weak, enough to support the Fed's planned rate cut in June.
At 00:05 Beijing time, the US dollar index was at 96.8786, trading weakly below the 50-day moving average (98.2523) and the 200-day moving average (98.5518).
Although last week's Challenger job cuts report, ADP private sector employment data, and weekly initial jobless claims clearly reflected the labor market outlook, the market expects inflation data to remain somewhat sticky. This has effectively bought the Federal Reserve time to postpone its first rate cut of the year, and is one of the reasons why the market has not significantly pressured the dollar due to expectations of a rate cut.
The overall outlook and daily chart pattern suggest that the US economy still possesses a certain degree of resilience, sufficient to prevent a significant collapse in the exchange rate from current levels.
Federal Funds Rate Futures Pricing: June Rate Cut Expected to Be Clear
However, traders are taking a more aggressive stance, continuing to bet that the Federal Reserve will ease monetary policy. As of last Friday's close, federal funds rate futures showed a 15.8% implied probability of a 25 basis point rate cut at the Fed's next decision on March 18, while the probability of a rate cut in June rose to 51.0%.
If Wednesday's non-farm payroll data significantly misses expectations, the probability of a March rate cut will jump, and the dollar will weaken. The latest market consensus forecast indicates that US non-farm payrolls are expected to increase by 70,000 in January, higher than the 50,000 in December.
Japanese Prime Minister Sanae Takaichi wins election, yen strengthens.
In terms of exchange rates, the yen strengthened against the dollar on Monday after Prime Minister Sanae Takaichi won the election. This news ended a six-day losing streak for the yen, as traders bet on fiscal stimulus boosting the stock market. Larger-scale fiscal stimulus could push up inflation and potentially bring forward the Bank of Japan's interest rate hike timetable. If the Bank of Japan raises interest rates and the Federal Reserve cuts rates, the dollar is likely to come under pressure, but this scenario is still some time away.
Technical Analysis: The downward trend remains unchanged.
(US Dollar Index Daily Chart Source: FX678)
Technically, the main trend for the US dollar index is downward. Today's new low makes 97.973 a new secondary high; a break above this level would reverse the main trend to upward; a break below 95.5660 would confirm a continuation of the downward trend.
The medium-term trading range is 99.492 to 95.5660. The retracement range of 97.522 to 97.987 saw a rebound capped at 97.973 last Friday, leading to today's decline. The new short-term range is 95.5660 to 97.973, with the 50% to 61.8% retracement level of 96.762 to 96.476 as the next downside target. Attention should be paid to whether the exchange rate experiences a technical rebound at this level or breaks down directly.
It should also be noted that the US dollar index is currently trading weakly below the 50-day moving average (98.2523) and the 200-day moving average (98.5518), confirming the bearish tone, and the moving averages also constitute resistance levels.
At 00:05 Beijing time, the US dollar index was at 96.8786, trading weakly below the 50-day moving average (98.2523) and the 200-day moving average (98.5518).
Although last week's Challenger job cuts report, ADP private sector employment data, and weekly initial jobless claims clearly reflected the labor market outlook, the market expects inflation data to remain somewhat sticky. This has effectively bought the Federal Reserve time to postpone its first rate cut of the year, and is one of the reasons why the market has not significantly pressured the dollar due to expectations of a rate cut.
The overall outlook and daily chart pattern suggest that the US economy still possesses a certain degree of resilience, sufficient to prevent a significant collapse in the exchange rate from current levels.
Federal Funds Rate Futures Pricing: June Rate Cut Expected to Be Clear
However, traders are taking a more aggressive stance, continuing to bet that the Federal Reserve will ease monetary policy. As of last Friday's close, federal funds rate futures showed a 15.8% implied probability of a 25 basis point rate cut at the Fed's next decision on March 18, while the probability of a rate cut in June rose to 51.0%.
If Wednesday's non-farm payroll data significantly misses expectations, the probability of a March rate cut will jump, and the dollar will weaken. The latest market consensus forecast indicates that US non-farm payrolls are expected to increase by 70,000 in January, higher than the 50,000 in December.
Japanese Prime Minister Sanae Takaichi wins election, yen strengthens.
In terms of exchange rates, the yen strengthened against the dollar on Monday after Prime Minister Sanae Takaichi won the election. This news ended a six-day losing streak for the yen, as traders bet on fiscal stimulus boosting the stock market. Larger-scale fiscal stimulus could push up inflation and potentially bring forward the Bank of Japan's interest rate hike timetable. If the Bank of Japan raises interest rates and the Federal Reserve cuts rates, the dollar is likely to come under pressure, but this scenario is still some time away.
Technical Analysis: The downward trend remains unchanged.
(US Dollar Index Daily Chart Source: FX678)
Technically, the main trend for the US dollar index is downward. Today's new low makes 97.973 a new secondary high; a break above this level would reverse the main trend to upward; a break below 95.5660 would confirm a continuation of the downward trend.
The medium-term trading range is 99.492 to 95.5660. The retracement range of 97.522 to 97.987 saw a rebound capped at 97.973 last Friday, leading to today's decline. The new short-term range is 95.5660 to 97.973, with the 50% to 61.8% retracement level of 96.762 to 96.476 as the next downside target. Attention should be paid to whether the exchange rate experiences a technical rebound at this level or breaks down directly.
It should also be noted that the US dollar index is currently trading weakly below the 50-day moving average (98.2523) and the 200-day moving average (98.5518), confirming the bearish tone, and the moving averages also constitute resistance levels.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
