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  • DXY loses momentum and returns to sub-90.00 levels.
  • US Nonfarm Payrolls came in at -140K in December.
  • The US jobless rate stayed unchanged at 6.7%.

The greenback, when measured by the US Dollar Index (DXY), now trades on the defensive and returns to the 89.70/65 band.

US Dollar Index gives away gains post-NFP

The index accelerated its correction lower after US Nonfarm Payrolls showed the economy lost 140K jobs during December, sharply contrasting with the 71K job gains expected.

On the brighter side, the Unemployment Rate stayed put at 6.7% vs. investors’ anticipation of a move higher to 6.8%.

In the meantime, USD-sellers stepped in on the back of now rising speculation that the Federal Reserve might have to pump further money to help the economy amidst the deterioration of the pandemic front.

Additional US data due later include the monthly Wholesale Inventories and Consumer Credit Change for the month of November and the speech by FOMC’s R.Clarida (permanent voter, dovish).

What to look for around USD

The index regains some buying interest and manages to leave behind recent lows in the 89.20 region, mainly on the back of the recovery of US 10 yields while the risk complex seems to be taking a breather. However, the outlook for the greenback remains immersed into the bearish side for the time being amidst massive monetary/fiscal stimulus in the US economy, the “lower for longer” stance from the Federal Reserve and prospects of a strong recovery in the global economy.

US Dollar Index relevant levels

At the moment, the index is losing 0.15 at 89.68 and faces the next support at 89.20 (2021 low Jan.6) followed by 88.94 (monthly low March 2018) and the 88.25 (monthly low February 2018). On the other hand, a breakout of 91.01 (weekly high Dec.21) would aim for 91.23 (weekly high Dec.7) and finally 91.92 (23.6% Fibo of the 2017-2018 drop).