As the trading day continues, markets remain cautious, shifting their focus toward upcoming eurozone revised GDP data and some ECB policymaker comments.
Looking ahead to the US session, focus shifts back to US economic data today with the release of the January Nonfarm Payrolls (NFP) and retail sales reports.
While the consensus anticipates a respectable addition of 55,000 jobs following a robust 130,000 increase in January, some analysts are bracing for a softer or even negative reading due to the severe winter weather that gripped the US in late January and early February.
A disappointing figure could trigger a brief dip in the US dollar; however, any losses are expected to be short-lived as the ongoing conflict in the Middle East continues to fuel safe-haven demand.
Markets are also closely watching for a reaction from the Federal Reserve. Governor Christopher Waller, who notably dissented in January in favor of a 25bps cut, is scheduled for a televised appearance at 1:30 PM CET today.
Current expectations suggest he may pivot toward advocating for a “pause” in rate adjustments. Such a stance would likely offer additional support to the greenback, adding another layer to today’s complex dollar narrative.
Unless a significant political breakthrough leads to a ceasefire, the dollar appears unlikely to enter a sustained decline. Instead, the global economic story remains dominated by governments struggling to manage the inflationary fallout of record-high energy prices—a scenario that remains fundamentally bearish for global bond markets.
DXY Expected Range: 98.50 – 99.50
Key Support/Resistance: 99.00 remains a critical psychological pivot point.
Verdict: It remains too early for a meaningful sell-off in the dollar given the current “fog of war.”
