The US dollar index (DXY) held steady on Friday morning as investors reflected on the statement by Jerome Powell. It also rose ahead of the upcoming non-farm payrolls (NFP) data from the United States. It is trading at $97.88, which is the highest it has been since June 1st, 2020.
NFP data ahead
The DXY index has been steady in the past few days as investors rush to its safety amid the rising crisis. The crisis continued this week as Russian forces attempted to capture more cities in Ukraine.
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At the same time, western officials continued to levy significant costs on the Russian economy with sanctions. They have sanctioned the most elite in Russia and started taking their priced assets like yachts.
The Russian economy has continued to weaken, with the ruble crashing to an all-time low while the stock market is still closed.
Amidst all this, the Federal Reserve chair hinted that the bank will start hiking interest rates this month in a bid to slow inflation. Analysts expect that the bank will deliver a series of rate hikes, with JP Morgan predicting as many as 9 hikes this year.
The next key catalyst for the US dollar index will be the American jobs numbers that will come out on Friday. Analysts polled by Reuters expect the data to show that the economy added more than 400k jobs in February after it added 467k in the previous month. It added over 500k jobs in January this year.
Also, they predict that the unemployment rate declined from 4.0% in January to 3.9% in March while wage growth accelerated. Additional numbers are expected to show that the participation growth expanded in February as most US states ended their Covid restrictions.
US dollar index forecast
The daily chart shows that the DXY index has been in a strong bullish trend in the past few weeks. It has managed to drop from a low of $89 in January 2021 to the current $98. That is a 9.73% increase. As a result, the index has moved above the 25-day and 50-day moving averages and is approaching the upper side of the ascending channel.
Therefore, the path of the least resistance for the pair is to the upside. If this happens, the next key level to watch will be at $98.50. This view will become invalid if the pair manages to move below the support at $96.
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Source: https://invezz.com/news/2022/03/04/dxy-us-dollar-index-forecast-ahead-of-the-nfp-data/