United States Dollar Index trades slightly lower at the start of the US NFP week

The US Dollar (USD) is slightly down in the Asian trading session at the start of the week. The US Dollar Index (DXY), which gauges the Greenback’s value against its peers, corrects 0.1% to near 99.58 after a strong Friday.

The Greenback gained strongly on Friday as remarks from Federal Reserve (Fed) Chairman Kevin Warsh at the Jackson Hole Symposium signaled that the central bank remains committed to bringing inflationary pressures down to the 2% target, lifting expectations of an interest rate hike in the September policy meeting.

“This summer's inflation data was better than expected, but do not tell me underlying trends have meaningfully changed," Fed Chair Warsh said and added, "Fed's predominant focus right now should be on prices."

According to the CME FedWatch tool, the odds of the Fed leaving interest rates again in the September meeting have diminished to 39.4% from almost 60% seen a week ago.

This week, investors will pay close attention to an array of US economic data, notably the Nonfarm Payrolls (NFP), which will be released on Friday. The data is expected to have a significant impact on the Fed’s interest rate expectations.

On the global front, renewed tensions between the US and Iran have lifted oil prices significantly. The WTI Oil price jumps 2% to near $84.35 at the start of the week, following the exchange of attacks between the US and Iran over the weekend.

The US Central Command (CENTCOM) struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz, following weeks of relative calm, Bloomberg reported on Sunday. In retaliation, Iran's Islamic Revolutionary Guard Corps (IRGC) launched ballistic missile strikes on two US bases in Jordan in retaliation for the US attack on Larak Island

US Dollar Index Technical Analysis

In the daily chart, the Dollar Index Spot trades at 99.60. The near-term tone is neutral to slightly bearish as price holds marginally above the 20-day exponential moving average (EMA) at 99.55 but remains capped by the 50.0% Fibonacci retracement at 99.73. The Relative Strength Index (RSI) at 48.25 hovers just below the 50 line, hinting at fading upside momentum while the index consolidates within the current corrective range.

On the topside, initial resistance is seen at the 50.0% Fibonacci retracement at 99.73, followed by the 38.2% retracement at 100.22 and the 23.6% level at 100.83, where a stronger supply zone could emerge if price extends higher. On the downside, immediate support is provided by the 20-day EMA at 99.55, with the 61.8% retracement at 99.24 and the 78.6% level at 98.54 acting as subsequent cushions ahead of the structural floor near the cycle low around the 100.0% retracement at 97.65.