US Dollar stabilizes as NFP boosts sentiment, trade and fiscal risks persist
The US Dollar (USD) edged higher on Thursday after stronger-than-expected Nonfarm Payrolls (NFP) data for June eased some concerns about the labor market. The upbeat report helped lift the Greenback off multi-year lows, as traders reassessed the likelihood of a Federal Reserve (Fed) rate cut in July.
TheUS Dollar Index(DXY), which measures the Greenback’s value against a basket of six major currencies, is hovering near 97.20 during the American trading session, marking a recovery from earlier weakness and snapping a multi-day losing streak. The bounce followed Wednesday’s disappointing ADP Employment Change report. While the ADP data initially fueled dovish expectations, Friday’s stronger NFP print helped stabilize the Dollar and cooled speculation of an immediate Fed rate cut.
The latest USNonfarm Payrolls(NFP) report came in stronger than expected, with the economy adding 147,000 jobs in June, beating forecasts of 110,000 and slightly above the 144,000 jobs added in May. The Unemployment Rate edged down to 4.1% in June 2025 from 4.2% in May, defying market expectations of a rise to 4.3%.
Building on this cautious mood, the US Dollar has declined by more than 10% over the past six months. The US Dollar remains vulnerable as broader macroeconomic and policy uncertainties increase pressure. Lingering concerns over the US President Donald Trump’s proposed tariffs and an increasingly fragile fiscal situation have dampened investor confidence. The combination of trade policy risks and rising government spending is fueling worries about long-term economic stability, reducing the demand for the Greenback.
Technical analysis: DXY struggles near key resistance after wedge breakdown
The Dollar Index (DXY) recently broke below a descending wedge pattern. After the breakdown, the index is now hovering in a narrow, range-bound phase between roughly 96.40 and 97.15, suggesting a temporary pause in the sell-off. The index is now attempting a mild rebound and appears to be retesting the lower boundary of the broken wedge near 96.80–97.00. This area, which once acted as support, is now acting as resistance. The index is still trading below the 9-day Exponential Moving Average (EMA) at 97.25, reinforcing the bearish setup unless buyers manage to reclaim that level with strong momentum.
Momentum indicators also support the idea of consolidation. The Relative Strength Index (RSI) is sitting near 31.49, indicating weak momentum that is easing slightly from the oversold zone. The Rate of Change (ROC) at -1.98 remains negative, but is flattening out, which aligns with the sideways movement in price. In short, the US Dollar Index is in a range-bound recovery attempt after the breakdown, but without a strong catalyst or bullish follow-through, the risks still lean to the downside. A clean break below 96.60 could resume the downtrend, while a close above 97.25 may hint at short-term stabilization.
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