US Dollar suffers losses as traders digest February NFP

• Nonfarm Payrolls data reported by the US Bureau of Labor Statistics came in higher than expected.
• Average Hourly Earnings for February unveiled a lower figure than expected, while the Unemployment Rate increased.
• Markets are still seeing the first cut in June.
• The index will close out a 1% losing week, its worst performance since December.

The US Dollar Index (DXY) is trading near 102.60 on Friday, recording a loss. The driving factors for these movements largely include the dovish stance of the Federal Reserve (Fed) Chair, Jerome Powell, and the weak performance of the US labor market in February.

Despite the Nonfarm Payrolls (NFP) report for February showing that the US Unemployment rate increased while Earnings mildly eased, markets are still betting that the easing cycle will begin in June. For the next session, the USD may suffer additional losses as investors fear an economic slowdown.

Daily digest market movers: DXY falls to lows after NFPs figures

• February's Nonfarm Payrolls reported by the US Bureau of Labor Statistics exceeded expectations, coming in at 275,000, remarkably higher than the predicted 200,000, indicating robust employment growth.
• On the negative side, the Unemployment rate for February saw an increase to 3.9%, higher than expectations of 3.7%.
• Wage inflation measured by the Average Hourly Earnings missed the consensus to rise by 4.3% YoY.
• US Treasury yields show a mixed performance with the 2-year yield at 4.48%, the 5-year yield at 4.06%, and the 10-year yield at 4.09%.
• According to the CME FedWatch Tool, the odds of Fed interest rate cuts in March and May remain low. Markets are bracing for the first cut to come in June.

DXY technical analysis: DXY bears seize control, oversold signals loom

The DXY's outlook is predominantly bearish despite the Relative Strength Index (RSI) nearing oversold conditions. The RSI's position near 30 often signals the potential for a price reversal. With the Moving Average Convergence Divergence (MACD) presenting rising red bars, the momentum is currently pointing toward the bears.

Further compounding this bearish notion, DXY resides below its 20, 100 and 200-day Simple Moving Averages (SMAs), contributing to an overall downward trend. These SMAs are pivotal technical markers, and their placement below current prices typically strengthens the sellers’ grip.

The bearish price action in recent trading sessions allies with the technical indicators to forge a negative short-term outlook. However, the RSI's near-oversold position may provide some potential for buyers to contest the bear’s hold, but they will struggle against the prevailing negative momentum.