The DXY dropped 0.36% against its basket of six currencies and touched an intraday low of 99.41, extending a slide that began the moment the Labor Department confirmed the economy shed 23,000 jobs last month against consensus for an 80,000-job expansion.
Payrolls Revision Deepens the Damage
The headline miss was compounded by downward revisions to prior months. May’s payroll gain was cut nearly in half to 63,000 from an originally reported 129,000, while June was slashed to 20,000 from 57,000. Together the revisions stripped roughly 103,000 jobs from the recent employment picture, undercutting the narrative of a resilient labor market that had supported the Fed’s tightening bias.
One offsetting detail: the Unemployment Rate ticked lower to 4.1% from 4.2%. Richmond Fed President Thomas Barkin characterized the environment as “low-hire, low-fire” and noted that corporate earnings “are quite strong,” framing the data as stagnation rather than deterioration.
Treasury Yields and Rate Bets Move in Tandem
The bond market responded immediately. The 10-year Treasury note yield fell 3.5 basis points to 4.637%, dragging the dollar lower as the yield advantage that had propped up the greenback narrowed. Money-market pricing shifted aggressively: the odds of a September hold jumped from roughly 42% to nearly 70%, while the probability of a 25-basis-point increase collapsed from 58% to 30%, according to Prime Terminal data.
That repricing matters because the dollar’s 2025 strength has been built on the premise that the Fed would keep rates higher for longer than its peers. With a single payrolls print, that pillar weakened considerably.
Technical Setup Flags Further Downside Risk
The Dollar Index daily chart shows price trading at 99.63, sitting beneath a clustered simple moving average pack near 100.57 that has flipped from support to overhead resistance. The Relative Strength Index (14) reads 36.19, hovering just above oversold territory and indicating selling pressure remains dominant though potentially nearing exhaustion.
A daily close below the rising support trend line near 99.63 would reinforce the bearish case and open room for a deeper slide. On the upside, reclaiming the SMA cluster at 100.57 would be the first signal the downside is easing, with descending resistance near 101.57 capping any stronger rebound.
What Happens Next
Attention now pivots to next Wednesday’s July Consumer Price Index release. Economists expect headline CPI to ease to 3.4% year-over-year from 3.5%, with core CPI ticking down to 2.5% from 2.6%. A softer print would cement the case for a Fed hold and likely pressure the US Dollar Index further. A day later, the Producer Price Index arrives — the input used to calculate the Fed’s preferred Core PCE gauge — giving investors a second read on the inflation trajectory before the September meeting.
For the dollar, the setup is straightforward: weak CPI confirms the payrolls signal and tests the 99.63 support; hot CPI revives hike talk and reclaims the 100.57 cluster. Either way, volatility is coming.
— Hiro Tanaka, markets desk, AXO News