US Dollar Experiences Losses Before the NFP

ExnessEThe dollar has weakened this week over 2% just days before major publications on the economic calendar. A major reason for this is the decline in the U.S. treasury bond yields, which have been in decline for the majority of February until today. When yields fall, they mean lower returns, making them less attractive to investors who shift their attention to higher-yield instruments like stocks, commodities, and cryptos.

Also, when the yields of the bonds drop, then fewer investors want them, so they don’t need as many dollars to buy them, which in turn reduces demand making the dollar weaker. Lower bond yields also affect the probability of the Federal Reserve cutting interest rates. Lower rates mean that there are fewer rewards for holding dollars, and therefore, investors shift to other currencies or assets, which also tends to put more pressure on the strength of the dollar.

On the other hand, the much anticipated U.S. job report on Friday might provide some support for the dollar mainly because of the expectations. Currently the unemployment rate is expected to remain static at 4% while the non-farm payrolls are expected to increase from 143,000 to 160,000. According to the U.S. Bureau of Labor Statistics, the expectations for the NFP were surpassed through 2024. Even though it had a declining trend, the unemployment rate was also declining, so that was not very bad news overall.

U.S 10 year treasury bond yields:

United States unemployment rate:

Non Farm Payrolls :

Crude Oil Possible Retest Around $70

Opec+ has decided to increase oil production from April, a move that caused crude prices to drop. This decision was unexpected, as the group had previously delayed such plans, in which the increase would be a gradual return of 2.2 million barrels a day over 18 months. The decision comes amidst concerns over US tariffs on goods imported from Canada and Mexico, which are also impacting crude prices.

Currently, Opec+ members are producing nearly 6 million barrels per day less than their combined capacity. The policy has led to tensions with the US, which unsuccessfully tried to get Riyadh to boost production after Russia’s invasion of Ukraine caused oil prices to soar. However, Saudi officials are now ready to increase production, even if it leads to lower prices. Analysts suggest that there is room for Opec+ to gradually add barrels before the summer, but they may need to pause towards the end of the year due to potential oversupply.

From the technical analysis perspective the price of crude oil is trading near the medium term lows that were tested in mid November and early December of last year. The Stochastic oscillator is in the extreme oversold levels indicating that there might be a bullish correction in the near short term while volatility is overstimulated as we see trading activity even outside the Bollinger bands.

Despite the recent bearish trend, which started in early January, the 50-day SMA is still trading above the slower 100-day SMA, hinting that the overall bullish trend might still be valid. If the area of $67 proves to be once again a strong support on the price then we might witness a bullish correction in the market probably retesting the area of $70 which is the psychological resistance of the round number as well as the previous short term high.

Gold Prices Rebound in Asian Trading Session Amid Weaker Dollar and Political Uncertainty

Gold prices are recovering in the Asian trading session after earlier losses supported mainly by a weaker U.S. dollar and political uncertainty following new U.S. import tariffs as US Commerce Secretary Howard Lutnick hinted at possible relief on recent tariffs for Mexico and Canada, which could pressure gold’s safe-haven status.

The dollar index dropped to a three-month low, making gold more appealing to other currency holders, and

China has unlocked more fiscal stimulus to support consumption amidst an escalating trade war with the US.

Markets are awaiting the employment report and US nonfarm payrolls data for cues on the US interest rate trajectory, but geopolitical events and tariffs are currently overshadowing economic data.

From the technical analysis standpoint the price has found sufficient support on the lower band of the Bollinger bands around $2,850 and has since rebounded to the upside. The Stochastic oscillator does not indicate any overbought or oversold levels, hinting that the short-term directional movement of the price could go either way, but due to the lack of a bearish catalyst, the most probable scenario could be bullish. The moving averages confirm that the bullish trend is still valid, while the Fibonacci extension level of 161.8%, around $2,950, is the major technical resistance level that is currently in effect.

This article was submitted by Antreas Themistokleous, an analyst at Exness.

The opinions in this article are personal to the writer. They do not reflect those of Exness or FX Empire.