Dollar Under Pressure as Markets Eye Delayed U.S. Labor Data

Key Takeaways:

*Markets continue to price in further Fed accommodation following the 25 bps rate cut to 3.50%–3.75%, with limited conviction-driven buying for the greenback.

*Delayed Nonfarm Payrolls and Unemployment Rate reports could trigger sharp USD moves. A downside surprise may accelerate selling, while a strong print could provide only short-term relief.

8Gold benefits from dovish Fed and weak USD: Bullion initially surged to record highs as real yields declined and the dollar softened, attracting safe-haven flows.

Market Summary:

The U.S. Dollar remained under pressure as markets continued to price in the Federal Reserve’s easing cycle following last week’s widely anticipated 25 basis point rate cut, which lowered the benchmark rate to 3.50%–3.75%. While the decision itself was fully priced, it reinforced expectations that the Fed is transitioning toward a more accommodative stance as policymakers gain clearer visibility into economic conditions after the resolution of the U.S. government shutdown. The shift has weighed on U.S. yields and limited demand for the greenback, keeping the dollar vulnerable to further downside.

Dollar sentiment remains fragile ahead of a heavy slate of delayed U.S. labor market data, including the long-awaited Nonfarm Payrolls and Unemployment Rate reports. With months of pent-up expectations, markets are highly sensitive to any surprise. A weaker-than-expected labor print could accelerate dollar selling by reinforcing concerns over slowing growth and justifying further policy easing, while a resilient outcome may only offer temporary support via a short-lived rebound in yields.

Against this backdrop, gold prices initially surged to fresh record highs, benefiting from the Fed’s dovish pivot, a softer U.S. dollar, and lower real yields that reduced the opportunity cost of holding non-yielding assets. However, the rally has since moderated as profit-taking emerged and geopolitical risks eased. Comments from Ukrainian President Volodymyr Zelenskiy signaling flexibility around NATO aspirations as part of peace discussions have reduced immediate safe-haven demand, prompting a pullback in bullion.

Despite the near-term retracement, gold’s broader fundamental backdrop remains constructive. Expectations of further Fed easing, persistent fiscal concerns in the U.S., and lingering uncertainty over global growth continue to support medium-term demand for hard assets. As long as incoming U.S. data reinforces the case for policy accommodation, dips in gold are likely to attract buyers, while the dollar remains prone to reactive, data-driven moves rather than a sustained recovery.

Technical Analysis 

DXY, H4: 

The DXY remains under sustained bearish pressure on the chart after confirming a decisive breakdown below the ascending trendline and the key horizontal support at 99.05. The recent sell-off accelerated through 98.55, exposing the index to deeper downside before finding tentative support near 98.10. Although price has attempted a minor bounce from this level, the recovery remains weak and corrective in nature, suggesting that sellers are still firmly in control of the broader structure. As long as DXY remains capped below 98.55, the near-term bias continues to favor further downside or range-bound consolidation at lower levels.

Momentum indicators align with this bearish narrative. The RSI is currently hovering around 36, reflecting weak momentum and an inability to sustain rebounds toward neutral territory. While not deeply oversold, it suggests limited bullish conviction. The MACD remains firmly negative, with both signal lines below zero and the histogram expanding slightly to the downside, indicating that bearish momentum is still present despite some slowing in selling pressure.

Resistance Levels: 98.55, 99.05
Support Levels: 98.10, 97.50

Gold, H4: 

Gold has extended its bullish momentum on the chart after a clean breakout above the previous consolidation range around 4,260–4,315, signaling a continuation of the broader upside structure. Price has pushed decisively toward the 4,370 resistance zone, marking a retest of the prior swing high area where selling pressure previously emerged. While the immediate move higher confirms strong bullish control, the proximity to this major resistance suggests that upside momentum may begin to slow, opening the door for short-term consolidation or a corrective pullback before the next directional move.

Momentum indicators continue to support the bullish outlook but are beginning to show signs of maturity. The RSI is holding above 60, reflecting strong bullish momentum, though its approach toward the upper range suggests that price may be entering a short-term overextended phase. Meanwhile, the MACD remains firmly positive with expanding histogram bars, indicating accelerating bullish momentum, albeit with the risk of a momentum slowdown if price stalls near resistance.

Resistance Levels: 4315.00, 4365.00
Support Levels: 4260.00, 4215.00