Dollar index (USDX) consolidates around 101.00 ahead of US nonfarm payrolls

Ahead of the US session open and the release of US labor market data, the US dollar index is holding around 101.00. On the daily chart, the index is trading above the 50-period EMA (99.87) and the 200-period EMA (99.30). The weekly 200-period EMA (100.80) has already been breached and turned into support. This is a classic strong bullish signal, pointing to the possible start of a longer-term uptrend if the index stays above 100.80.

Momentum is moderately bullish: RSI(14) is around 60, so there is room to the upside, but the OsMA has printed its first negative bar, indicating some loss of impulse and a likely short-term consolidation. The stochastic has slipped below 30 and is approaching the oversold area, which also suggests more of a pause in the rally than a trend reversal. See the link for details.

Labor market, AI, and corporate layoffs

The nonfarm payrolls for June report surprised again — nonfarm employment rose by 172,000 versus expectations of about 85,000, and revisions to March and April added a combined 93,000. Unemployment remained at 4.3%, and the labor force participation rate was 61.8%, in line with market expectations. Experts see a mix of seasonal effects and a longer-term market restructuring driven by AI adoption.

Against this backdrop, the corporate sector is also under pressure: Microsoft is preparing to cut more than 5,000 jobs worldwide (under 2.5% of its 220,000 workforce), following a nearly 20% drop in market capitalization (about $600 billion) and concerns over costly AI infrastructure and threats to traditional business lines. Layoffs, mainly in sales, consulting and the Xbox gaming division, are due to begin next week. See the link for details.

The Fed pauses, but strong employment data could change everything

Slower hiring gives the Fed reason not to rush into an emergency rate hike, while Chair Kevin Warsh — despite a tougher tone at times — has softened his rhetoric and emphasized AI's potential to boost productivity. The market has largely priced in no further tightening, but stronger-than-expected employment reports could sharply shift expectations — the dollar could then rise another 3–5%.

The dollar is also supported by a risk-off mood stemming from the prolonged Middle East crisis and high energy prices, which feed inflation risks and justify a tighter Fed policy. Regional bank leaders are increasingly hawkish: if prices do not decelerate, rate hikes are possible, adding further pressure on equity markets. See the link for details.