Author: Mr. Amar – Technical Analyst

The US dollar rose from two-week lows on Friday after data showed the world’s largest economy created far more jobs than expected, raising the chances of a larger Federal Reserve interest rate increase at the March policy meeting. The US Dollar Index (DXY) bounces back from a fresh monthly low following the 467K rise in Non-Farm Payrolls (NFP), and the update to the Consumer Price Index (CPI) may fuel the recent rebound in the greenback as the gauge for inflation is expected to increase for the fifth consecutive month.

According to chartists, the dollar also tracked the surge in US Treasury yields, and also DXY Index attempts to halt a five-day selloff as the NFP report shows a further improvement in the labor market, and the development may put pressure on the Federal Reserve to normalize monetary policy sooner rather than later amid the ongoing rise in inflation. The upcoming CPI data released this Thursday night, may fuel the recent rebound in the US Dollar as the headline reading is expected to increase to 7.3% from 7.0% per annum.

With that said, the US Dollar Index may track the January range over the coming days as it bounces back from a fresh monthly low at 95.14, and another uptick in the US CPI may fuel the recent rebound in the greenback as market participants brace for an imminent change in regime. Looking ahead of all major pairs which traded against US Dollar will show significant movement in regards to Fed’s monetary policy.