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The US dollar continues to rise despite weak data. It’s not because the time has not come yet.
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: The data is weak but the dollar keeps rising, it is not that the time has not www.xmtraders.come yet". Hope this helps you! The original content is as follows:
The recent increase in buying of U.S. debt has radiated to the U.S. dollar. Faced with the United States’ increasing geopolitical exposure, the market tends to allocate more U.S. dollars and U.S. debt in response.
At the same time, the recent employment data in the United States is not good, but the dollar is rising instead, which confirms that the focus of recent market transactions is on the geopolitical issues between the United States and Venezuela. Market participants maintain a wait-and-see attitude before the release of the non-farm payrolls report (NFP). On the one hand, there are downward concerns about the slowdown of the U.S. economy, and on the other hand, the support logic of the dollar's safe-haven attribute, the two form a delicate balance.
The recently released ADP employment data fell short of expectations and the number of job vacancies continued to decline. Core indicators clearly point to a cooling of the labor market. This may force the Federal Reserve to speed up the pace of interest rate cuts, which in turn will substantially suppress the trend of the US dollar.
The current market sentiment is also dominated by another major event: the U.S. Supreme Court is likely to rule on the legality of Trump's tariff remarks on Friday. Its conclusion will directly affect the fiscal deficit and inflation expectations, becoming a key variable that drives interest rates and the trend of the U.S. dollar. The market is betting that the judge can calm the turmoil without affecting the tariff agreement without affecting the tariff rights, giving the U.S. dollar a tailwind.
As for data, perhaps weak data needs to be superimposed on the non-farm payrolls report, and coupled with the subsidence of geopolitics, can it once again become the decisive force for the trend of the US dollar.
The impact of recent economic data
Weak economic data (including ADP employment data, which only added 41,000 jobs), has significantly limited the upward momentum of the U.S. dollar index. From a data perspective, bulls lack the fundamental logic to continue rising.
Job vacancies and Labor Turnover Survey (JOLTS) data show that,The number of job openings fell to 7.146 million, lower than market expectations. This forward-looking indicator clearly signals that labor demand is continuing to cool.
The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) rose to 54.4, showing that the service sector has a certain degree of resilience, but this local bright spot is not enough to offset the negative impact of the overall weakness in the labor market.
The good news is that U.S. employment data from challenger www.xmtraders.companies in December showed that hiring in December was the highest since 2022. Since 1989, the number of layoffs in 2025 ranks seventh. Challenger www.xmtraders.companies in the United States laid off 35,553 people in December, www.xmtraders.compared with the previous value of 71,321. Andy Challenger, Chief Revenue Officer of Challenger www.xmtraders.companies in the United States: The layoff plan announced at the end of the year is the smallest in 2025. While layoffs in December are typically slow, coupled with additional hiring plans, this is a positive sign.
But the bad news is that one month’s hiring and layoff data cannot reverse the trend of large-scale layoffs and hiring cuts throughout the year.
At the same time, the initial claims and continuing claims data released by the United States, as important forward-looking data before non-farm payrolls, also show contradictions and entanglements. Both data increased from last week. At the same time, initial claims were lower than expected, and continued claims were higher than expected, implying that layoffs are slowing down but jobs are not easy to find, and there is no obvious direction.
Market Sentiment and U.S. Dollar Index Stability
The U.S. Dollar Index maintains a narrow range above 98.50, reflecting the market’s cautious expectations rather than the continued strong fundamental support of the U.S. dollar.
The rise of the 10-year and 30-year U.S. bonds together with the U.S. dollar hints at the safe-haven demand for market funds. The United States has increased military spending, kidnapped the president of Venezuela, and at the same time provoked geopolitical disputes similar to Greenland.
Investors choose to wait and see out of risk aversion and uncertainty, especially as the high-impact data of the non-farm payrolls report approaches, most traders tend to wait for clear signals before making arrangements.
With the current fragile balance between concerns about an economic slowdown and the dollar's safe-haven properties, even if geopolitics is at the core of recent trading, any upward momentum could be disrupted by weaker-than-expected performance in labor market data.
The non-farm payrolls report and Fed policy expectations
The market generally expects the non-farm payrolls report to show that the number of new jobs has slowed to about 55,000, a further drop from 64,000 in the previous month, and the expansion momentum of the job market continues to weaken.
If the non-farm payrolls report falls short of expectations (new jobs are less than 50,000 or the unemployment rate rises more than expected), it will directly increase the market's bets on the Federal Reserve's aggressive interest rate cuts, put significant downward pressure on the US dollar, and may even trigger DXY to fall below the key support level of 98.50.
Federal Reserve officials including Stephen Millan and Neel Kashkari have sent dovish signals that they are more focused on economic growth, which has further strengthened theThis has affected the market's pricing of loose monetary policy and paved the way for a weakening of the US dollar in the medium term.
Conclusion and technical analysis:
The U.S. dollar index is currently in a fragile situation. The weak labor market is the core downside risk it faces, and the fundamental support logic continues to weaken.
If Trump continues to release geopolitical signals, the U.S. dollar is still likely to continue to strengthen.
In addition, various employment data are weak, and initial applications, continued applications, and challenger data cannot provide a clear direction. Everything still depends on the non-farm payrolls report. If the non-farm payrolls data disappoints and the unemployment rate rises more than expected, it may push the U.S. dollar index below the 98.63 support level and return to the bearish range. The next support is around 98.10. On the contrary, the U.S. dollar index can work with geopolitics to maintain a strong rebound pattern.
Technically, after the U.S. dollar index rose above 98.63, it saw the shadow of a sustained rebound. 98.90 is the key pressure level above. If it can rise above 98.90 and stabilize, the rebound pattern will be established and the U.S. dollar index will start to strengthen again.
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