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  • Mixed employment figures from the U.S. weigh on the greenback.
  • 10-year T-bond yields look to end the fourth week in a row lower.
  • The trade deficit in the U.S. decreases more than expected.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, extended its losses in the second half of the day as the macroeconomic data releases from the United States failed to trigger a recovery attempt. After touching its lowest level since June 14 at 93.64, the index steadied in the bottom half of its range and was last seen losing 0.4% at 93.75.

According to the monthly report released by the U.S. Bureau of Labor Statistics, total nonfarm payroll employment rose by 213K in June following May’s 244K (revised from 223K) to beat the market estimate of 195K. The publication also showed that amid a 0.2% increase in the labor force participation rate, the unemployment rate increased to 4% from 3.8%. Average weekly earnings, meanwhile, came in at 2.7% in June to meet May’s reading.

“The broad-based character of the labor market is evidenced by the rise in the diffusion index to 65.5 for all private industries and at 65.8 for manufacturing firms (compared to 59.2 a year ago). These job gains are consistent with 3.0 percent plus economic growth in the current quarter and a FOMC September rate hike,” Wells Fargo analysts noted in a recently published report.

In fact, the CME Group FedWatch Tool’s probability of a September hike advanced to 80% from 73% a day ago.  

On the other hand, the international trade deficit in the U.S. shrunk to $43.1 billion in May from $46.1 billion in April to better the experts’ forecast of $43.7 billion.

Meanwhile, the 10-year US T-bond yields extend their fall since breaking below the 3% mark in early June and remain on track to end the fourth straight week with losses, supporting the broad-based selling pressure witnessed on the USD. Moreover, Trump administration’s trade policy and its potential negative impacts on the U.S. economy keep investors on edge.

Technical levels to watch

The next support for the index is located at 93.20 (Jun. 14 low) ahead of 92.40 (May 5 low) and 92 (psychological level). On the upside, 94.25 (daily high) now aligns as the initial resistance before 94.70 (Jul. 3 low) and 95.25 (Jun. 28 high).