NFP Volatility Ahead – Is the Dollar Ready to Break Higher?🟢 DXY Outlook – A Key Day for the Dollar Index
Yesterday’s monthly candle closed with strong bullish momentum, marking a powerful start to August. Today, on the first trading day of the month, we’re expecting three major U.S. economic releases:
NFP, Average Hourly Earnings (m/m), and the Unemployment Rate.
As discussed in last week’s outlook, DXY has successfully broken above the key 100 level and confirmed a monthly close above it — a significant technical development. With no major order blocks or visible resistance in the way, the path toward the 102 target appears technically clear.
That said, I anticipate mixed data from today’s releases — which means we could see both sides of liquidity being taken during the initial reaction. Price might dip toward lower zones temporarily to collect liquidity before resuming its bullish move toward 102.
📌 In summary:
From a swing perspective, I believe the direction remains bullish for the Dollar Index as long as we hold above the 100 level.
When I say the data might be “mixed,” I mean the market could show an initial drop toward lower zones at the time of release — not because of a reversal, but to grab liquidity before continuing higher toward the 102 target.
Unless we see something unexpectedly extreme in the numbers, I expect the DXY to remain on track to reach the 102 level in the coming days or next week.
🔁 This analysis will be updated whenever necessary.
Disclaimer: This is not financial advice. Just my personal opinion.
Dollarindex
Dollar Falls as Traders Price In Two 2025 Rate Cuts on Weak JobsDollar Falls as Traders Price In Two 2025 Rate Cuts on Weak Jobs Data
Introduction
In a significant turn of events for the global currency markets, the U.S. dollar has taken a sharp tumble as traders brace for a more dovish Federal Reserve. A weaker-than-expected U.S. employment report for July 2025 has prompted market participants to price in two interest-rate cuts by the Fed before the end of the year. This shift in monetary policy expectations comes during a time of heightened global uncertainty, much of it triggered by President Donald Trump's aggressive trade policies, which have already disrupted the $7.5 trillion-a-day foreign exchange market.
The Bloomberg Dollar Spot Index, a key gauge of the dollar’s strength against major currencies, plunged as much as 1%—marking its worst single-day performance since April 21, 2025. The greenback’s decline was mirrored by strong gains in rival currencies, with the Japanese yen appreciating 2.2% and the euro climbing more than 1% against the dollar.
This article delves into the recent developments surrounding the U.S. dollar, the implications of weak jobs data, the Federal Reserve’s likely response, and how Trump’s trade policies are shaping the broader economic landscape.
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Weak Jobs Data Sparks Policy Shift
The July 2025 employment report came in well below expectations. Non-farm payrolls growth fell short, and revisions for May and June showed fewer jobs were added than previously reported. These figures suggest that the U.S. labor market is cooling more rapidly than anticipated, raising concerns about the sustainability of the post-pandemic economic recovery.
According to Helen Given, a foreign exchange trader at Monex Inc., “It’s now clear that the U.S. labor market is cooling fairly sharply. There’s a good chance that Trump’s crusade against Chair Powell ratchets up further in the coming days, and there could be further losses for the dollar to come as a result.”
The disappointing employment data has led traders to adjust their expectations for U.S. monetary policy. Futures markets are now pricing in two 25-basis-point rate cuts by the end of 2025, a stark reversal from the earlier outlook that suggested the Fed would remain on hold or even consider tightening if inflation remained sticky.
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The Federal Reserve’s Dilemma
The Federal Reserve now finds itself in a precarious position. On one hand, inflation has moderated in recent months, giving the central bank more room to maneuver. On the other hand, a weakening labor market could indicate a broader slowdown that might require immediate action to prevent a recession.
Fed Chair Jerome Powell has come under increasing political pressure from President Trump, who has publicly criticized the Fed for keeping rates too high. Trump argues that rate cuts are necessary to support U.S. exporters and counteract the negative effects of his own tariffs and trade restrictions.
Historically, the Fed has maintained its independence from political influence, but in an election year, the pressure to act can become intense. If the Fed moves to cut rates, it will be seen as responding to both economic data and political dynamics—a delicate balancing act.
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The Global Currency Market Reacts
The ripple effects of the dollar’s decline are being felt across the globe. The $7.5 trillion-a-day foreign exchange market, already under strain from geopolitical uncertainty and shifting central bank policies, has seen increased volatility in recent weeks.
The Japanese yen, often viewed as a safe-haven currency, surged 2.2% against the dollar following the release of the jobs data. Meanwhile, the euro gained over 1%, reflecting investor sentiment that the greenback’s era of dominance may be waning—at least for now.
Emerging market currencies also found some relief, as a weaker dollar generally eases pressure on countries with large dollar-denominated debts. However, the overall picture remains complex, as trade tensions and capital flow volatility continue to weigh on risk sentiment.
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Trump’s Trade Policies: A Double-Edged Sword
President Trump’s trade strategies have been a central feature of his second term in office. From imposing tariffs on Chinese imports to renegotiating trade agreements with the European Union and Canada, Trump has sought to reshape the global trading system in favor of American manufacturers.
Yet these policies have produced mixed results. While some sectors have benefited from protectionist measures, others—particularly those reliant on global supply chains—have suffered from rising costs and retaliatory tariffs. The uncertainty generated by these policies has also dampened business investment, slowed global trade, and disrupted financial markets.
“The dollar had tumbled this year as Trump’s aggressive trade policies rocked the $7.5 trillion-a-day currency market, weighing on global growth outlook,” Bloomberg reported.
Investors are increasingly concerned that continued trade friction, combined with growing political pressure on the Fed, could lead to policy missteps that undermine the U.S. economy and erode confidence in the dollar.
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Market Implications
The dollar’s recent decline has far-reaching implications for various asset classes:
1. Equities
U.S. equities have shown mixed reactions. While lower interest rates are typically supportive of stock prices, the underlying reason—economic weakness—has investors on edge. Sectors such as technology and consumer discretionary are expected to benefit from cheaper borrowing costs, but cyclical sectors may struggle if growth slows further.
2. Bonds
Treasury yields have fallen sharply as traders anticipate rate cuts. The 10-year yield dropped below 3.8%, its lowest level in months. The yield curve has also flattened, a potential warning sign of slowing economic momentum.
3. Commodities
A weaker dollar typically supports commodity prices, as most are priced in dollars. Gold, oil, and industrial metals all saw gains in the wake of the jobs report. However, demand-side concerns stemming from a global slowdown could limit the upside.
4. Emerging Markets
For emerging markets, a softer dollar offers both relief and risk. On the positive side, it reduces debt servicing costs and can attract capital flows. On the negative side, if the dollar’s weakness reflects a broader global slowdown, risk appetite could remain subdued.
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Looking Ahead: What to Watch
As markets digest the latest economic data and policy signals, several key developments will be closely monitored:
1. Upcoming Fed Meetings
The Federal Open Market Committee (FOMC) will meet again in September. Markets will be keenly watching for any changes in tone or new forward guidance. A rate cut in September now appears increasingly likely, especially if subsequent data confirms a labor market slowdown.
2. Inflation Trends
While inflation has moderated, it remains a key concern for policymakers. If inflation rebounds unexpectedly, it could complicate the Fed’s ability to cut rates without stoking price pressures.
3. Geopolitical Risks
Trade tensions, particularly with China and the EU, remain unresolved. Any escalation could further destabilize markets and weigh on the dollar. Additionally, developments in the Middle East, Eastern Europe, and Southeast Asia could add to the uncertainty.
4. U.S. Presidential Politics
With the 2026 presidential election campaign already underway, Trump’s rhetoric and policy decisions will continue to influence market sentiment. His ongoing criticism of the Fed could erode confidence in U.S. institutions, particularly if it leads to perceived politicization of monetary policy.
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Conclusion
The sharp fall in the U.S. dollar following weak July jobs data marks a pivotal moment in 2025’s economic narrative. With traders now pricing in two Federal Reserve rate cuts by year-end, the stakes have never been higher for policymakers, investors, and political leaders.
While a softer dollar can provide some temporary relief to exporters and boost inflation expectations, it also reflects deeper concerns about the strength of the U.S. economy and the unintended consequences of aggressive trade policies. President Trump’s confrontational approach to global trade, combined with mounting pressure on the Fed, is creating a complex and potentially volatile environment for markets.
As the year progresses, all eyes will be on the Federal Reserve’s response, the resilience of the U.S. labor market, and the evolving political landscape. In a world where headlines can move markets in seconds, clarity, stability, and sound policy have never been more critical.
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Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.
What now for the dollar after a poor NFP report?It is difficult not to link the bad US data to the impact of tariffs. Indeed, it certainly looks that way, especially given that the slowdown in jobs started in early Q2 when reciprocal tariffs were announced. Companies expecting margins to be squeezed by higher duties probably thought twice about hiring workers in order to keep costs down. So, the US labour market has been losing steam fast, undoubtedly due to tariff concerns. Unless the data surprises on the upside soon, the Fed may have no choice but to cut—and cut again. Against this backdrop, the recovery in the dollar is going to a long bumpy road.
We noted the area around 100.00 to be resistance in the previous update, and that level has held, thanks to the weak jobs report (and ISM survey that was released later). The DXY was testing potential support around 98.95 at the time of writing. Will it be able to bounce there? Break that on a closing basis and next week could bring more technical dollar selling.
By Fawad Razaqzada, market analyst with FOREX.com
DXY testing 100.00 resistanceThe US dollar index has risen to rest a key resistance area around the 100.00 level. Previously a key support and resistance zone, what happens here could determine the near-term technical direction for the US dollar.
Key support below this zone is at 98.95, marking a prior resistance. Given the short-term bullish price structure, I would expect this level to hold if the greenback were to ease back from here.
If the bullish momentum gathers pace, then 101.00 could be the next stop, followed by the recent high of 101.97.
From a macro point of view, resilient economic data and persistent core inflation concerns continue to support the Federal Reserve’s cautious policy approach. Today’s core PCE inflation reading came in slightly above forecast, at 2.8% year-over-year versus the expected 2.7%. In addition, jobless claims were better than anticipated, registering 218,000 compared to the 224,000 forecast. The Q2 Employment Cost Index also surprised to the upside, rising 0.9% quarter-on-quarter.
These figures follow yesterday’s stronger-than-expected GDP report and a solid ADP private payrolls release, further underscoring the strength of the U.S. economy.
Attention now turns to Friday’s nonfarm payrolls report, which could have a meaningful impact on rate expectations. Fed Chair Jerome Powell has emphasized the importance of the unemployment rate as a key metric, so any upside surprise could reinforce the Fed’s current position.
However, expectations are not very high for the non-farm payrolls report. Current forecasts suggest an increase of 106,000 jobs, with average weekly earnings rising 0.3% month-over-month, and the unemployment rate edging up to 4.2%. Yet, the scarcity of strong leading indicators this month adds a layer of uncertainty to the outlook.
By Fawad Razaqzada, market analyst with FOREX.com
DXY - Dollar Index - Potenzial New Long phase
As we see in the chart .. in 2022 december we had a big volume accumulation before the october 2022 top to 112
After that we had a rebound and a laterality from sep. 22 to july 25.
In this moment we touche this volume and from my point of view we completed an ABC pattern.
Probably we have completed the pattern with a final Impulsive wave C and in this moment we start the final LONG wave 5
USDOLLAR H4 | Bearish reversalBased on H4 chart analysis, we can see the price rising towards the sell entry at 12,826.67, which is a swing high resistance.
Stop loss is at 12,892.30, which is a swing high resistance.
Our take profit will be at 12,752.33, which is a pullback support.
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DXY with interest rates With interest rates remaining steady, the U.S. Dollar is currently moving in a bullish direction.
As shown in the chart, it seems likely that price will break the previous high and form a bullish Quasimodo (QM) pattern. The price may then reach the 50% Fibonacci level.
After that, we should wait and observe the market's reaction.
If price gets rejected from the 103 zone — especially if accompanied by a rate cut or bearish price action — we could see a sharp decline toward the 95 area.
This 95 zone also aligns with a key weekly Fibonacci support level on the Dollar Index.
As long as the Federal Reserve maintains its hawkish stance, the U.S. Dollar may continue its upward momentum. However, the 103–104 zone — which aligns with the 50% Fibonacci retracement and a significant supply area — could serve as a strong resistance.
If price gets rejected from this area and we simultaneously see signs of a rate cut or weakening U.S. economic data, a trend reversal and corrective phase could begin. In that case, lower targets around 95 or even 93 could become likely in the medium term.
good luck
Dollar Index - Expecting Bullish Continuation In The Short TermH4 - Strong bullish momentum followed by a pullback.
No opposite signs.
Until the two Fibonacci support zones hold I expect the price to move higher further.
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Will DXY Get Supported With Fresh US-EU Trade Agreement?Macro approach:
- The US dollar index has traded mixed since last week, pressured by lingering trade uncertainty and cautious market sentiment ahead of major economic events.
- Dovish Fed expectations and subdued US inflation continued to weigh on the greenback, while news of a fresh US-EU trade agreement and upcoming talks with China contributed to two-way price action.
- Economic data reflected a resilient labor market but flagged moderating US growth, with investors closely watching forthcoming GDP figures and the Fed's policy stance.
- The US dollar index may remain range-bound as markets await catalysts, including the Fed meeting, the 2Q GDP release, and key labor market data.
Technical approach:
- DXY surged and closed above the descending trendline and the resistance at around 98600, indicating an early signal of a shift in the market trend.
- If DXY maintains above 98600, it may retest the following resistance at 99400, confluence with EMA78.
- On the contrary, closing below the descending trendline and EMA21 may prompt a retest of the swing low at 96.60.
Analysis by: Dat Tong, Senior Financial Markets Strategist at Exness
DXY LOCAL SHORT|
✅DXY is going up now
But a strong resistance level is ahead at 98.948
Thus I am expecting a pullback
And a move down towards the target of 98.451
SHORT🔥
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DXY at Its Most Critical Level of 2025 — Will the 100 Bank LevelThe Dollar Index (DXY), just like several other majors, is approaching a very important level. We’re now near the 100 mark, which is not only a psychological level — but also a key institutional (bank) level.
There’s also a gap zone left behind that price is about to fill. I believe the index will stay in a range over the next 1–2 days as it waits for critical data later this week — especially Wednesday’s announcements and Friday’s NFP report, which could set the tone for what’s next.
Based on current market sentiment, Trump’s remarks, Powell’s upcoming speech, and broader macro factors, I believe DXY has the potential to break above 100 and move toward 102–104, if that level is broken cleanly.
Let’s also not forget — price bounced from a monthly demand block near 96, and we’re seeing weak support across majors like EUR and Gold. That adds confluence for potential dollar strength.
📌 What do you think — is dollar strength just around the corner?
🔁 This analysis will be updated whenever necessary.
Disclaimer: This is not financial advice. Just my personal opinion.
DXY at Its Most Critical Level of 2025 — Will the 100 Bank LevelThe Dollar Index (DXY), just like several other majors, is approaching a very important level. We’re now near the 100 mark, which is not only a psychological level — but also a key institutional (bank) level.
There’s also a gap zone left behind that price is about to fill. I believe the index will stay in a range over the next 1–2 days as it waits for critical data later this week — especially Wednesday’s announcements and Friday’s NFP report, which could set the tone for what’s next.
Based on current market sentiment, Trump’s remarks, Powell’s upcoming speech, and broader macro factors, I believe DXY has the potential to break above 100 and move toward 102–104, if that level is broken cleanly.
Let’s also not forget — price bounced from a monthly demand block near 96, and we’re seeing weak support across majors like EUR and Gold. That adds confluence for potential dollar strength.
📌 What do you think — is dollar strength just around the corner?
🔁 This analysis will be updated whenever necessary.
Disclaimer: This is not financial advice. Just my personal opinion.
Dollar Index (DXY): Possible Reversal | Inverse Head & ShouldersThe dollar has had a tough year, but that might be changing.
I’ve spotted a well-known reversal pattern: an Inverse Head & Shoulders.
This pattern features three dips, with the middle one—the "head"—being the deepest.
Now, the price has rebounded from the Right Shoulder and is heading higher.
It’s approaching the Neckline at $98.7, which needs to be broken for a bullish confirmation.
If that happens, the projected target is around $101.6, based on the depth of the pattern.
This lines up closely with the previous high of $102 from May. The target area is highlighted in the blue box.
However, if the price falls below the Right Shoulder’s low at $97.1, the pattern would be invalidated.
Anyone else see this pattern?
Could this be the bottom for the dollar?
DXY weekly outlookDXY Weekly Outlook
This week, I’m watching to see if the dollar continues its bearish trend or breaks above the current supply zone. We've already seen a strong reaction from the 8hr supply, but price could still tap into the 1hr supply before making its next move.
If price drops from here, I’ll be looking at the 2hr demand zone below for a possible bullish reaction. If DXY pushes up from that zone, pairs like EU and GU could drop — which lines up with my overall short bias on those.
Gold may not always move in sync with the dollar, but DXY still gives a good idea of market sentiment.
Let’s see how it plays out and stay reactive.
Dollar Index (DXY): Strong Bearish Price Action
Dollar Index broke and closed below a support line
of a bullish flag pattern on a daily.
Because the market is trading in a bearish trend,
this violation provides a strong bearish signal.
I expect a bearish movement to 96.75
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Dollar Index Holds Below 98 as Markets Await Trade Deal ProgressThe dollar index remained below 98 today, extending its two-day decline as investors watched trade negotiations ahead of the August 1 deadline. Treasury Secretary Scott Bessent said deal quality is the priority, suggesting Trump could grant extensions to countries showing real progress.
Markets are also focused on Fed Chair Powell’s speech for signals on interest rates. Despite Trump’s push for a cut, traders are not expecting action this month.
U.S. Dollar (DXY) bearish?Will dollar continue its bearish momentum or will it reverse?
Technical Summary
DXY remains in a firm bearish trend, having dropped around 11% this year. The setup is formed by a chain of lower highs and lower lows, confirming an unrelenting downtrend.
Support Level: ~97.70
Resistance Zone: 98.55–98.80
Long-Term Outlook: Bearish, unless a clear break and close over the resistance zone on the daily or weekly timeframe.
Technically, the momentum indicators remain weak, and the failure to sustain rallies above the 99.00 level also contributes to downward pressure further. The market is now consolidating within a narrow range after steep selling, which suggests probable continuation if macro catalysts are favourable.
Fundamental and Sentiment Drivers
Several macroeconomic and geopolitical drivers are underpinning the weakening of the U.S. dollar:
Federal Reserve Uncertainty:
Speculation over the ultimate fate of Federal Reserve Chairman Jerome Powell under political pressure from the executive branch has severely undermined investor confidence in the central bank’s independence. This has been manifested in increased volatility and bearish pressure on the dollar.
Trade Policy and Tariff Risks:
Ongoing trade tensions, including the possibility of sweeping tariffs (15–20%) on Chinese and European Union goods, have created a risk premium on valuations of the U.S. dollar. Market players still fear retaliation and its effects on trade stability in the world.
Fiscal Position and Credit Ratings:
The US fiscal deficit, which is approaching 7% of GDP, and recent credit rating downgrades to its outlook, have set alarms ringing regarding the structure. These fiscal developments have eroded the popularity of the US dollar as a safe-haven asset, particularly with foreign investors.
Global Monetary Landscape:
With European Central Bank and Bank of Japan maintaining policy guidance tight, and Federal Reserve already indicating that direction for a rate cut in Q4 2025 is being eyed, the falling rate differentials still maintain pressure on the dollar.
Market Outlook: Week of July 21–25, 2025
Major Geopolitical and Economic Events:
DATE : Ongoing
EVENT : U.S.- EU & U.S. — China Trade Negotiations.
MARKET RELEVANCE : High
Resolution or escalation will directly impact USD demand.
DATE : Mid-week
EVENT : Federal Reserve Speeches (including Powell)
MARKET RELEVANCE : High
Monetary policy guidance and institutional stability.
DATE : July 24–25
EVENT : Jobless Claims, Flash PMIs, New Home Sales, Durable Goods Orders
MARKET RELEVANCE : Medium–High
Labour market data, housing data, and production activity have the potential to shift rate expectations and dollar sentiment ahead of the FOMC and PCE releases.
Strategic Implications
Outlook: DXY remains structurally bearish in the short to medium term. Additional weakness below 98.80 and sustained closes below 97.70 would reassert downward momentum, risking a further retracement to the 96.00-95.50 region.
Possible Bullish Reversal Triggers:
A conclusive resolution to U.S. trade negotiations.
Unexpectedly solid economic data (particularly core inflation or employment).
Hawkish Fed commentary supporting policy tightening expectations.
Last thoughts
The U.S. Dollar Index is currently at structurally weak technical and fundamental foundations. Absent a sudden reversal of the monetary policy message or geopolitical resolution, the path of least resistance appears to remain to the lower side. Market participants need to pay special attention to upcoming economic data releases, central bank rhetoric, and trading news because any one of them could be a pivotal driver of near-term dollar behavior.
EURUSD Buy Trade Idea: Reversal Rocket Ready to Launch!Hey Fellow Traders! 👋
The EURUSD (EU) is setting up for a massive reversal that’s got me hyped! 🚀 After nailing the lows of that descending channel like a pro, price has retraced to our expected zone and is now bouncing hard. It’s time to gear up for a potential buy trade targeting the Buyside Liquidity! Let’s break down this fire setup and get ready to ride the wave! 🌊
📈 The Setup: Reversal in the Making!
EU hit the descending channel lows as predicted, and now it’s showing some serious bullish vibes with a strong bounce off a key weekly trendline support. This isn’t just a random move—price is reacting to a weekly demand zone and a trendline that’s holding like a fortress. 🏰 I’m expecting a reversal to kick in, aiming for that juicy Buyside Liquidity up top. But hold up—don’t just dive in blindly! Let’s talk strategy. 😎
🎯 Trade Details: How to Play It Smart
Entry Zone: Look for a calculated entry in this bounce area. Key setups to watch for:
FVG (Fair Value Gap) or IFVG (Imbalance Fair Value Gap) for precision entries.
Order Blocks (OB) for high-probability setups.
Trendlines/Support Zones: Use these for confluence, as EU is respecting that weekly trendline support.
Target: We’re gunning for the Buyside Liquidity—a high-probability target where price loves to gravitate.
Stop Loss: Place your stops below the recent lows or your chosen setup (FVG/OB) to keep risk tight.
👀 Keep an Eye on DXY for Confluence
The Dollar Index (DXY) is a key player here. A weakening DXY could supercharge this EU reversal, so monitor it closely for extra confirmation. If DXY starts to roll over, it’s like pouring rocket fuel on this trade! 🚀
🧠 Why This Reversal Makes Sense
Weekly Trendline Support: Price kissed this level and is bouncing like it means business.
Weekly Demand Zone: This area has historical strength, making it a prime reversal spot.
Channel Lows Conquered: EU smashed through the descending channel lows and is now retracing for the next leg up.
⚠️ Risk Management Reminder
Don’t YOLO this one! Use proper risk management—calculate your position size, set tight stops, and only enter when your setup aligns. Whether you’re using FVGs, OBs, trendlines, or classic support/resistance, make sure your entry is calculated to avoid getting caught in a fakeout. 💪
💬 Let’s Talk Trades!
What’s your take on this EU reversal? Are you jumping in with an FVG, OB, or something else? Drop your thoughts, setups, or questions in the comments below! 👇 If this idea gets you pumped, smash that LIKE button ❤️, follow for more banger trade ideas, and share your charts with the community! Let’s keep the vibes high and the profits higher! 💰
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