US Dollar Clinches a Strong Week with Hawkish Fed Sentiment

The US Dollar Index (DXY) surged over 0.80%, reaching 103.90 on Friday, marking a successful week driven by optimistic labor market reports. The robust performance convinced the market that a rate cut in March is improbable, with Federal Reserve Chair Powell emphasizing the need to assess incoming data for timing the easing cycle. Powell’s stance, coupled with strong labor market indicators, including a steady 3.7% unemployment rate and a remarkable addition of 353K jobs in January (exceeding the expected 180K), contributed to the Dollar’s strength.

Average Hourly Earnings for January surpassed consensus, rising 0.6% MoM, and the annual figure for 2024 landed at 4.5%. The US bond market saw significant yield increases across various tenures, with the odds of a March rate cut dropping to 20%, according to the CME FedWatch Tool. Technical analysis indicates bullish momentum, with the DXY surpassing the 200-day SMA, supported by positive RSI and MACD signals, despite some resistance from the 100-day SMA.

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