Losses were limited, with the USD index remaining close to recent highs

The dollar looks resilient at the beginning of the week. The report on Friday showed that nonfarm payrolls rose by just 194,000 in September, much lower than 500,000 expected. Meanwhile, the unemployment rate fell to 4.8%, versus expectations of 5.1%.

In a knee-jerk reaction to the release, the greenback weakened versus most counterparts. Still, losses were limited, with the USD index clinging to recent highs. The market reaction showed that the report failed to alter expectations for a reduction of the Fed’s bond purchases as soon as November.

In general, the greenback trades in a mixed manner ahead of a busy week. At the same time, traders prefer a cautious tone ahead of Wednesday’s US inflation data and the FOMC meeting minutes. If the CPI figures exceed expectations, the dollar would rally across the board to notch fresh yearly highs while stocks could come under the selling pressure along with other risky assets.

EURUSD failed to overcome the 1.1585 intermediate resistance earlier in the day to turn negative during the European hours. The pair slipped back towards the 1.1550 area, struggling to see a more sustained recovery. As such, mid-2020 lows around 1.1530 seen last week remain in the market focus. A break below this area would pave the way towards the 1.1500 figure. On the upside, the key barrier arrives around the 1.1600 figure, followed by the 1.1620 region.

Meanwhile, USDJPY rallied to fresh three-year highs around 113.00 on Monday as market players continue to bet on tapering of the Fed’s bond-buying in November despite soft U.S. payrolls data. Despite the emerging overbought conditions, the pair could extend the ascent in the coming days, as the dollar may receive another boost to notch fresh gains during the upcoming week.


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