US dollar nears 2024 lows at start of NFP week

• The US dollar is trading steady early this week with US non-farm payrolls as the main event on Friday.
• The US calendar gets off to a quiet start with the Chicago PMI and the Dallas Fed Manufacturing survey.
• The US dollar index is near the 2024 low in search of substantial support.

The US dollar (USD) is broadly trading early this week near Friday’s year-to-date lows ahead of a busy week that will conclude with key non-farm payrolls data. The main theme of the jobs data will be how much the US Federal Reserve (Fed) will cut interest rates at its November meeting.

On Monday’s economic calendar, the Chicago Purchasing Managers’ Index (PMI) for September is due to be released, followed by the Dallas Fed’s manufacturing business index for September. With both indices in contraction territory, it will be interesting to see how they move before US Federal Reserve Chairman Jerome Powell takes the stage at around 17:00 GMT.

Daily market fortunes: What could Powell add?

• Monday will start with two rather important data releases. The first is The Chicago Purchasing Managers Index for September, which will be published at 13:45 GMT. A still-contracting number is expected at 46.5, slightly better than August’s 46.1.
• At 14:30 GMT, the Dallas Fed manufacturing business index for September is expected to be released. Expectations are similar to those for the Chicago PMI, with analysts expecting the index to remain contractionary at -4.5, but improving from the previous -9.7.
• Two Fed speakers to watch out for Monday:
  • Around 12:50 GMT, Federal Reserve Governor Michelle Bowman delivers a speech on the US economic outlook and monetary policy at the Bankers Association President/CEO Conference in Charleston, South Carolina.
  • Around 17:00 GMT, Federal Reserve Chairman Jerome Powell delivers a speech on the US economic outlook at the 66th annual meeting of the National Business Economics Association in Nashville, Tennessee.
• Asian stock markets are trading mixed, with Japanese shares down more than 3 percent, while Chinese shares are higher, with the Shanghai Shenzhen CSI 300 composite index down more than 8 percent.
• The CME Fedwatch tool shows a 60.4% chance of a 25 basis point rate cut at the next Fed meeting on November 7, while 39.6% are pricing in another 50 basis point rate cut basic.
• Benchmark US 10-year yield trades at 3.77%, looking to test three-week high of 3.81%

US Dollar Index Technical Analysis: Anything Here is an Adventure

The US Dollar Index (DXY) cannot move away from that new annual low of 100.16. The biggest problem is that there are no technical levels to trade on. Either adventurous traders will enter and potentially push the DXY back higher or wait for the next sub-100.00 pivotal support at 99.58.

A retracement of resistance levels is needed earlier this week. With three daily closes below 100.62, this level is now considered firm resistance. If the dollar bulls can turn things around, look to 101.90 for the second resistance level on the upside. Just above, the 55-day simple moving average (SMA) at 102.22 will enter.

Time to do our homework for more cons too. The fresh 2024 low is at 100.16, so there will be a test before more downside occurs. Below that, and that means giving up the high of 100.00, the July 14, 2023 low at 99.58 comes into play.

US Dollar Index: Daily Chart