US Dollar Index bounces off lows near 95.40 ahead of ISM

• The index loses further momentum and visits 95.40, daily lows.
• US Non-farm Payrolls came in above expectations at 304K.
• US ISM Manufacturing next of relevance in the calendar.

The greenback remains on the defensive on Friday and it has now receded to the 95.40 region, or fresh daily lows when gauged by the US Dollar Index (DXY).

US Dollar Index offered on Payrolls

The index has come under further downside pressure despite the US economy added 304K jobs during the first month of the year, largely surpassing initial forecasts.

However, inflation pressure via wages estimated by the Average Hourly Earnings expanded at a monthly 0.1%, missing expectations and taking the yearly variation to 3.2%. Still on the not-so-bright side, the unemployment rate inched higher to 4.0% from 3.9%.

Looking ahead, the greenback is expected to remain in the centre of the debate in light of the release of the critical ISM Manufacturing and the final gauge of the Consumer Sentiment.

In the meantime, the index is closing its second consecutive week with losses, exacerbated after the dovish tone from the FOMC meeting on Wednesday, while some progress on the US-China trade front also put the buck under fire.

What to look for around USD

The picture around the greenback has deteriorated further following Wednesday’s dovish FOMC meeting. Today’s wage-inflation figures appear to be losing some traction in spite of the persistent solidness of the labour market. In addition, the US-China trade talks are apparently navigating the right direction and also weighing on the sentiment surrounding the buck ahead of the Trump-Xi Jinping meeting later this month.

US Dollar Index relevant levels

At the moment, the pair is losing 0.05% at 95.51 and a breakdown of 95.31 (200-day SMA) would open the door to 95.16 (low Jan.31) and then 95.03 (2019 low Jan.10). On the other hand, the immediate hurdle emerges at 95.88 (21-day SMA) seconded by 96.14 (100-day SMA) and finally 96.22 (38.2% Fibo of the September-December up move).