US Dollar: holds above 100.00, awaits the US GDP and CPI

The US Dollar consolidates at the end of the week, trimming some of its earlier losses after a stellar Nonfarm Payrolls report, maintaining the US Dollar Index above the 100.00 milestone. March data showed the US economy added 178K to the workforce, exceeding economists’ forecasts of 60K. Although the headline suggests the labour market is strong, traders should treat the data with a pinch of salt, as last month’s initial number was -92K, but the data was revised down to -133K, one of the largest falls since Covid.

Overall, the US jobs market added 68K people over the first three months, a relief for the Federal Reserve, which noted that the risks under the dual mandate were balanced between employment and inflation. Now, the focus can turn to inflation driven higher by the energy shock from the Middle East conflict, and the risks of it getting out of control increase the chances of a stagflationary scenario.

Next week, the US economic calendar will be busy. Gross Domestic Product data and inflation will grab the headlines. The chances of a stagflationary scenario are stronger because the Consumer Price Index remains above the Fed’s target, pressuring the central bank to keep rates higher for longer. To avoid those talks, GDP for Q4 2025 must be at least 0.7% as expected, or higher.

From a technical perspective, the US Dollar Index (DXY) ripped higher for the second straight day, yet on a weekly timeframe, stalled at 100.00 as buyers faced strong selling pressure, capping the advance towards the May 16 swing high of 101.25. Although momentum remains bullish, as depicted by the Relative Strength Index (RSI), the DXY needs to clear the 100.50 psychological level to pave the way for further upside. On the other hand, if the US Dollar moves below 99.29, April’s 1 low, exposes the next area of interest seen at the confluence of the 100-, 200- and 50-day SMAs at the range of 98.38-98.65.