Dollar Strength Returns as Traders Eye NFP

Traders' Opinions

Summary:

The US Dollar rebounded after three straight days of losses as investors turned cautious ahead of this week's key US labor market data. Focus now shifts to JOLTS job openings and Thursday's Nonfarm Payrolls report for fresh clues on the Federal Reserve's next policy move.

BUY USDX

EXP

TRADING

101.100

Entry Price

106.500

99.000

101.020 +0.180 +0.18%

0.0

Pips

Flat

99.000

Exit Price

101.100

Entry Price

106.500

The US Dollar bounced back on Tuesday, ending a three-day losing streak as investors repositioned ahead of a series of key US labor market reports that could provide fresh direction for Federal Reserve policy. The US Dollar Index (DXY) rose about 0.3% to trade near 101.40 as traders trimmed bearish bets before this week's high-impact economic releases.

Attention is firmly on Thursday's US Nonfarm Payrolls report, with economists expecting the economy to have added around 110,000 jobs in June, down from 172,000 in May. The unemployment rate is forecast to remain steady at 4.3%, suggesting the labor market is slowing but remains relatively resilient.

In my view, the Dollar's recovery reflects investor caution rather than renewed bullish conviction. Markets remain reluctant to make aggressive moves ahead of employment data that could significantly influence expectations for the Fed's next interest rate decision.

According to the CME FedWatch Tool, traders continue to price in nearly an 80% chance of at least one additional Federal Reserve rate hike this year, providing underlying support for the greenback.

Before the payrolls report, investors will closely watch Tuesday's JOLTS Job Openings data. Vacancies are expected to ease to 7.3 million in May from 7.618 million previously, offering another important snapshot of US labor demand.

With labor market data taking center stage this week, the US Dollar is likely to remain sensitive to incoming economic releases. Stronger-than-expected figures could reinforce the case for higher interest rates, while weaker data may revive expectations for a less aggressive Fed and weigh on the greenback.

Technical Analysis

DXY remains in a strong bullish structure on the 4-hour chart, with price trading near 101.36 after reclaiming the major 101.00–101.20 resistance zone. The index has been building a steady recovery from the 96.50–97.00 support region, and the latest breakout confirms that buyers remain firmly in control.

The move above 101.00 is technically important because this zone had previously acted as a major ceiling. Now that price is holding above it, the same area should act as immediate support. As long as DXY remains above 101.00, the bullish continuation setup remains valid.

On the upside, the next key target sits around 105.00, which aligns with the projected move on the chart. A sustained break above that level would expose the broader resistance zone near 106.00–106.50.

On the downside, a break back below 101.00 would weaken short-term momentum and expose 100.00, followed by stronger support near 96.50–97.00. However, unless sellers reclaim the 101.00 breakout zone, dips are likely to remain buying opportunities.

Momentum remains positive, with price consolidating above former resistance rather than rejecting sharply lower. This suggests the current pause is more likely a continuation setup than a reversal.

TRADE RECOMMENDATION

BUY DXY

ENTRY PRICE: 101.10

STOP LOSS: 99.00

TAKE PROFIT : 106.50

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