DXY: NFP can be binary event for USD – OCBC

FXStreetSep 5, 2025 10:08 AM

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Overnight data continued to show that US labour market is softening. Dollar Index (DXY) last at 97.98 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Markets remain worried about a tariff-driven inflation

"ADP employment disappointed at 54k (vs. 68k expected), jobless claims rose and ISM services employment remains in contractionary territory. This puts focus on US payrolls data tonight (830pm SGT). Consensus looks for a 75k print (below 6m average of 81k) for NFP."

"Given that markets already fully priced in a 25bp cut for Sep and a total of 2 cuts for the year, a much softer-than-expected data print will be needed to alter the rate cut narrative and weigh on USD. Conversely, if the print comesin much stronger than expected, then the USD may see another spike. Next week, the focus will be on PPI, BLS revision to establishment survey and CPI."

"Markets remain worried about a tariff-driven inflation and any uptick may also upset USD bears. DXY slipped, alongside softer UST yields. Daily momentum shows signs of turning mild bullish while RSI is flat. 2-way risks likely. Resistance at 98.70 (100 DMA) and 99.60 (23.6% fibo retracement of 2025 high to low). Support at 97.50 levels."

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