U.S. Dollar Index Soars on Friendly Jobs Data

The U.S. government reported today that 227,000 jobs were created in February. The number was better than pre-report estimates of 213,000. In addition, January’s Non-Farm Payrolls number was revised up to 284,000 from 243,000. December’s net hiring was also kicked up a few notches from 203,000 to 223,000. The unemployment percentage held steady at 8.3% as forecast.

The report suggested that the economy was gaining momentum and that this strength was likely to continue over the near-term. Looking at this report from a historical perspective, the pace at which full-time jobs grew over the past three months was the fastest since the end of the 2007-2009 recession. Additionally, today’s report also signified the best performance since early 2006.

The March U.S. Dollar Index soared after the release of the better-than-expected report. On the 5-minute chart, the futures market jumped from 79.55 to 79.74 before continuing on to 79.94. (Fig. 1)

(Fig.1) Daily March U.S. Dollar Index surged on the 5-minute chart immediately on the release of the U.S. Non-Farm Payrolls Report.

The March U.S. Dollar is recovering nicely after nearly completing a 50 percent retracement of its short-term range. Based on the rally from 78.12 to 79.98, expectations were for the index to pull-back to at least 79.05 following a closing price reversal top on Wednesday.

Today’s strong comeback rally has put the market in a position to negate this reversal following a move through 79.98. A trade through this top is likely to trigger a further rally into a 50 percent price level 80.08. Additional upside momentum could drive the market into an old top at 80.24 and finally the Fibonacci retracement level at 80.55. (Fig. 2)


(Fig. 2) The strong rally in the March U.S. Dollar Index has put the market in a position to challenge the most recent tops at 79.98 and 80.24.

The jump in the Dollar Index coincided with a simultaneous break in the Treasury market. March 30-yr Treasury Bonds and 10-yr Treasury Notes weakened after the number. With interest rates rising slightly because of the friendly employment report, traders are favoring the dollar over the other major currencies.