U.S. Dollar Index at risk of renewed dip if ADP jobs data falls short of 111K forecast
Dollar Index rebounds on upbeat job data but stalls near technical resistance
The U.S. Dollar Index recovered sharply on Tuesday, reversing much of Monday’s losses after upbeat job data and renewed optimism around U.S.-China trade relations.
Hiring in April rose to 3.5% from 3.4% in March, lifting sentiment on the U.S. economy and providing support for the greenback. The index rebounded 0.74% from a multiweek low of 98.15 to reclaim the 98.50 resistance zone and reach an intraday high of 98.88.
Highlights
-The U.S. Dollar Index recovered to 98.94 before stalling below 50 EMA resistance
-RSI on both 4-hour and daily charts tilts bearish signalling weakening momentum
-ADP jobs data expected at 111K may decide if price holds above or breaks below 98.50
That momentum extended into Wednesday’s Asian session, as price pushed higher to 98.94, coming just shy of Monday’s high at 98.99. However, the upside faltered during the European session, as price struggled near the 50 EMA on the 4-hour chart. A pullback followed, trimming earlier gains and pushing the index down 0.13% on the day to 98.58 at the time of writing.
The U.S. Dollar Index price dynamics (April - May 2025). Source: TradingView
The lack of follow-through above the 98.90 region suggests that the 50 EMA and broader resistance structure are exerting pressure. Despite the recent recovery, the index still trades within a broader pattern of lower highs and lower lows that has persisted over the last four days.
The U.S. Dollar Index bearish RSI alignment signals fading upside into midweek
Volume has also declined notably during the last four days, indicating a reduction in selling conviction but the RSI momentum indicator reinforces bearish views. The 4-hour RSI has returned to bearish territory and aligns with the daily RSI, which is also tilted downward. This dual bearish confirmation raises the probability that the index could break back below the 98.50 support level if upcoming catalysts disappoint.
Market focus now turns to further labour market data, especially the ADP private payrolls report scheduled for release today. Expectations sit at 111K, up from the previous 62K reading. A figure above forecast would be dollar-positive and could revive upside pressure. Conversely, a miss may give bears an opening to press below 98.50 again.
In summary, while the U.S. Dollar Index bounced on improved economic data and sentiment, technical resistance and weak momentum indicators suggest that downside risks remain. Traders now await labour data to provide the next directional cue.
The Dollar Index fell after weaker-than-expected factory data signalled slowing economic activity. Price broke below last week's low and extended a six-week decline.
