U.S. Dollar Index bounces back amid China trade optimism and upcoming NFP report
U.S. Dollar Index trims weekly losses
The U.S. Dollar Index is on a recovery path on Friday, extending gains made since the previous day's rebound from a weekly low. After falling to 97.96, the lowest point this week, the index found support and closed Thursday’s trading at 98.30. That recovery led to a steady rally across Friday’s Asian and European trading sessions.
• The U.S. Dollar Index climbs 0.35% today as a rebound extends from Thursday's low
• 98.69 key EMA resistance in focus ahead of nonfarm payrolls
• Jobs data could flip sentiment toward either 98.97 or 97.50 retest
By the European session, the index had surpassed the previous day's high of 98.53 and traded near 98.60, recording a daily gain of 0.35%. The move has helped pare back this week’s losses, which had earlier exceeded 1%. A key factor behind the rebound appears to be fresh remarks from President Trump following his conversation with Chinese President Xi. Trump stated that progress on the trade deal is in “very good shape,” reducing market anxiety about U.S.-China trade tensions and lifting demand for the dollar.
The U.S. Dollar Index price dynamics (May - June 2025). Source: TradingView
The immediate market focus now shifts to the upcoming U.S. nonfarm payrolls report, scheduled for release during the North American session. The forecast stands at 126K, down from a previous reading of 177K. The outcome of the report could play a decisive role in determining the dollar’s short-term direction.
The U.S. dollar index sentiment flatlined as RSI nears neutral before NFP data release
If actual job growth exceeds expectations, it would support the case for a stronger dollar and extend today’s rebound toward the key resistance level of 98.69. That 98.69 level coincides with the 50 EMA on the 4-hour chart, making it a critical price ceiling. A break above this barrier would increase the chances of the dollar testing 98.97, which would effectively reverse all of this week’s losses and restore a short-term bullish outlook.
If the jobs report falls short of expectations, the U.S. Dollar Index could reverse today’s gains and slide back toward the April low near 97.50. That level served as a major support base in mid-April and could be retested if market sentiment turns bearish.
Traders are holding a neutral posture ahead of the data, as reflected in the RSI on the 4-hour chart. The RSI has risen but remains near the neutral zone, suggesting that traders are holding back from strong directional bets until the data is released. The outcome of the report will likely determine whether the dollar extends its recovery or resumes its broader decline.
The U.S. Dollar Index is trapped in a tight 0.8% range this week as weak U.S. data caps the upside. Thursday’s jobless claims may decide whether DXY breaks below 98
