US Dollar Forecast: DXY Holds Steady as 10-Year Yields Firm, Gold Rallies on Fed Rate Cut Bets

U.S. Dollar Edges Higher Amid Weak Jobs Data and Fed Policy Speculation

The U.S. Dollar Index (DXY) rose slightly against major currencies on Friday, as traders assessed weaker-than-expected U.S. Non-Farm Payrolls (NFP) data and its potential effects on Federal Reserve policy. Despite fluctuating on the news, the dollar continues to hover around its 200-day moving average at $103.824, a level viewed as a critical support threshold. A sustained move above this point could signal buying strength, while a failure to hold may prompt further downside.

At 14:25 GMT, the U.S. Dollar Index is trading 104.058, up 0.168 or +0.16%.

Non-Farm Payrolls Miss Expectations

The U.S. October NFP report, showing an increase of only 12,000 jobs compared to the anticipated 100,000, marks the lowest monthly gain since late 2020. The unemployment rate remained unchanged at 4.1%. Economic disruptions, including hurricanes and strikes in key sectors like aerospace, likely impacted the report, according to the Bureau of Labor Statistics. This weakness in job growth comes as the Federal Reserve prepares for its November meeting, with market expectations indicating a 25-basis-point rate cut.

Analysts suggest the softer data may not shift the Fed’s easing plans immediately, as broader economic signs remain mixed. City Index strategist Fiona Cincotta noted that “the dollar [should be] supported over the coming weeks,” despite the likelihood of a rate cut next week, which traders largely anticipated. Unless the economy shows further marked weakening, the dollar is expected to maintain its relative strength, as seen in October’s 3.1% monthly increase—the dollar’s best month since 2022.

Treasury Yields and Inflation Data

Yields on the U.S. 10-year Treasury held steady at around 4.3%, reflecting a limited response to the weak jobs report. The 2-year yield dipped slightly to 4.133%, following a modest 3-basis-point decline. Traders noted that one-time factors impacting the labor market data—such as strikes and weather events—may lead the Fed to attribute some weakness to transitory issues.

In addition to labor data, inflation figures remain in focus, with the recent personal consumption expenditures (PCE) price index—a key inflation metric—rising 2.1% year-over-year in September. This aligns with Fed expectations and suggests inflationary pressures are stable for now, potentially supporting continued measured rate cuts. Markets now await the Fed’s November 7 meeting, where a quarter-point cut is widely anticipated.

Gold and Precious Metals Surge

Gold prices rose 0.4% on Friday, reaching $2,754 per ounce as the dollar softened following the payroll data release. This follows a 4% gain in October, driven by increased demand amid U.S. election uncertainty and a weakening labor market. Investment flows into gold-backed exchange-traded funds (ETFs) have surged, bolstering the metal’s rally toward a potential $3,000 per ounce target within six months, according to Citi analysts.

Other precious metals also posted gains, with silver up 0.5% at $32.80 per ounce, platinum rising 0.9% to $996.90, and palladium climbing 2.9% to $1,137.50.

Market Forecast

In the short term, the U.S. Dollar Index may maintain strength if it can secure a foothold above the 200-day moving average. Should positive momentum build, the index could target resistance levels around 104.636 to 104.799. Conversely, a break below $103.144 could signal bearish momentum, with room for further declines if economic data continues to disappoint. With the Fed’s likely rate cut and the jobs report’s impact uncertain, traders may see increased dollar volatility in the coming weeks.