In the wake of a crucial U.S. jobs report, the dollar dropped to its lowest level in almost a month against major rivals.
A measure of the greenback’s comparative strength against six peers, the dollar index, was little changed at 92.207 after touching 92.151 earlier.
In a speech at Jackson Hole a week ago, Jerome Powell said that a taper was still possible this year, but that there was no rush to raise interest rates. That sent the greenback further downward.
The nonfarm payrolls data due Friday is expected to grow by 750,000, while unemployment is expected to decline from 5.4% to 5.2%.
It is estimated that between 375,000 and over a million jobs will be added. The economy is showing mixed signals ahead of the report.
It was reported overnight that layoffs reached their lowest level in more than 24 years. Nonetheless, Wednesday’s ADP National Employment Report came in much worse than anticipated.
Inflation rates on the continent are at decade-high levels, and the European Central Bank is expected to issue hawkish remarks ahead of its policy meeting on Sept. 9. The euro went up to $1.1878 on Aug. 4, after hitting $1.1884 on Aug. 4.
In addition to a move toward $1.19, there is talk that the ECB could signal a slower pace of asset purchases next week.
Today’s non-farm payrolls appear to have triggered a progressive short USD position on the currency market.
As Fed officials began suggesting the virus’ spread could delay policy tightening, the dollar index declined after reaching a 9-1/2-month high of 93.734 on August 20.
Still, DXY bulls can’t be ruled out of seeing 94 index points on the chart if they ignore RSI signals and cross the 93.50 resistance.
In other words, it is likely that the quote will extend recent gains around 93.45, but a further advance may be held back by the likely overbought RSI conditions