The US Dollar (USD) staged a notable rebound, snapping a three-day losing streak, with the US Dollar Index (DXY) trading 0.3% higher near 101.40 on Tuesday [1]. This resurgence comes as investors adopt a cautious stance ahead of the upcoming US Nonfarm Payrolls (NFP) data for June, scheduled for release on Thursday [1]. The NFP report is anticipated to show the creation of 110,000 new jobs, down from 172,000 in May, while the unemployment rate is expected to remain steady at 4.3% [1].
Market sentiment has shifted towards expectations of a more hawkish Federal Reserve, with the CME FedWatch tool indicating that traders see an almost 80% chance of at least one interest rate hike this year [1]. Another source notes that traders are pricing in above a 60% probability of a Fed rate hike by September [2]. The strengthening USD has been reflected across major currency pairs: the USD/CAD pair remained resilient, trading around 1.4230, as the US Dollar's strength offset a weaker Canadian Dollar pressured by lower crude oil prices and uncertainty over US-Iran peace talks [2]. Meanwhile, the USD/CHF pair maintained modest intraday gains, with technical indicators suggesting continued buying pressure and a potential extension of gains beyond the 0.8100 mark [3].
Technical analysis across sources highlights a bullish near-term bias for the US Dollar Index, which is trading above its 20-period exponential moving average at 100.56, with the Relative Strength Index (RSI) at 67.83, just below overbought territory [1]. For USD/CHF, the pair is trading in an established uptrend, having broken above the 200-day EMA and the 0.8000 psychological level, with immediate resistance at 0.8154 and support at 0.8097 [3].
Looking ahead, investors are closely monitoring several key data releases, including Tuesday's US JOLTS Job Openings for May (expected at 7.3 million, down from 7.618 million in April) [1], Wednesday's US ADP employment data, and Thursday's NFP report [2]. Market participants are also awaiting Canada's GDP data for May, with expectations that the Bank of Canada will keep interest rates on hold through most of the year [2].
Geopolitical developments, particularly renewed US-Iran hostilities, have revived inflationary fears and further supported the case for Fed rate hikes, although diplomatic signals remain conflicted, with the US and Tehran offering contradictory statements regarding peace talks [2][3].
CONCLUSION
The US Dollar has regained strength across major currencies, driven by rising expectations of a hawkish Federal Reserve and cautious positioning ahead of key US employment data. Technical indicators and market sentiment point to a bullish near-term outlook for the USD. Upcoming economic releases and geopolitical developments will be closely watched for further direction.