By eFXdata — Feb 06 - 04:30 PM
Synopsis:
Tomorrow’s US January jobs report could be pivotal for the USD Index (DXY), with soft data potentially triggering a 1-2% correction. However, ING believes USD weakness will be short-lived, as structural factors—tariffs and stable US yields—will support the dollar in Q2.
Key Points:
-
Soft Jobs Data Could Drive USD Lower
- Earlier this week, JOLTS job openings data showed a weaker labor market, pressuring the USD.
- A disappointing NFP print could push DXY towards the 106.35/50 range.
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Tariffs & US Yields Limit Further Downside
- ING expects structural and broader tariffs to return in Q2, which should reinforce USD strength.
- US Treasury yields are unlikely to drop significantly from here, supporting the dollar’s resilience.
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USD Weakness Would Be Temporary
- While short-term downside risk exists, ING believes DXY will stay within a range this quarter.
- The 106.35/50 area could act as a floor for USD weakness in Q1.
Conclusion:
A softer-than-expected US jobs report could drive another 1-2% correction in DXY, but USD downside is limited. ING expects tariffs and stable US yields to support the dollar, making any near-term weakness a buying opportunity.
Source:
ING Research/Market Commentary
