Dollar keeps firm tone on expectations of economic recovery acceleration and possible earlier than expected rate hike
The dollar kept firm tone in early Monday’s trading, supported by strong US labor data, released last Friday.
The greenback advanced further against the basket of major currencies in the lowered market activity due to Easter holidays.
Investors digested better than expected US employment report which showed a surge in new jobs in March and slight drop in unemployment that boosted hopes for faster economic recovery.
Unexpectedly strong rise in non-farm payrolls and upward revision of February figure, added to expectations that all the jobs lost during the pandemic could be recovered by the end of next year.
Upbeat numbers from the US manufacturing sector, released last week, boosted positive sentiment and added to hopes that economic recovery will accelerate and prompt Fed to start tightening policy earlier than expected.
Markets focus on today’s release of US ISM non-manufacturing PMI (Mar 58.5 f/c vs 55.3 in Feb) which is expected to confirm solid economic rebound from pandemic.
The dollar rose strongly in past three months, posting the best quarter in nearly three years, lifted by improving conditions in the US economy, with strong bullish acceleration seen in March, when the greenback rose around 2.5% against its major counterparts.
Corrective pullback from new five-month high at 93.45 (Mar 31) was shallow and contained by rising 10DMA, with subsequent bounce suggesting that correction was over.
Last week’s formation of 10/200DMA golden cross added to positive tone as daily studies are in bullish setup and underpin the action.
Fresh recovery cracked psychological 93.00 level and eye pivotal barrier at 93.45 (Mar 31 high / Fibo 76.4% of 94.78/89.15) break of which would expose Nov 4 peak at 94.30 and open way for full retracement of 94.78/89.15 bear-leg.
Res: 93.34; 93.45; 93.69; 94.08
Sup: 92.89; 92.62; 92.48; 92.36