NFP & Middle East Tensions: What’s Next for the US Dollar at This Pivotal Moment?
After a week of intense geopolitical turmoil, global markets are quietly shifting their focus from the Middle East conflict back to US macroeconomic data. Despite the lingering shadow of war, traders are now holding their breath for the week’s most important event: the US non-farm payrolls (NFP) report .
Geopolitics: A Brief Calm?
Crude oil prices entered a period of consolidation at high levels after the White House announced that the U.S. Navy would provide escorts for commercial vessels. Although the extreme panic over supply disruptions in the Strait of Hormuz has temporarily subsided, the high degree of uncertainty surrounding the conflict between the U.S., Israel, and Iran provides a solid “war premium” base for oil prices.
NFP Showdown: The Crossroads of the Dollar and Stock Indices
Tonight’s jobs data will be the final arbiter of the Federal Reserve’s policy path of “higher interest rates for longer.” The market currently expects only 59,000 new jobs in February, a significant drop from the previous month’s 130,000, making the subsequent volatility highly explosive.
- Scenario A: Better-than-expected data (positive for the US dollar) If the number of jobs significantly exceeds expectations and wage growth remains robust, it will validate the Fed’s hawkish stance. A strong labor market means the Fed has no reason to cut interest rates to rescue a weak stock market, at which point the US dollar will experience a strong rally.
- Scenario B: Data significantly below expectations (negative for the US dollar). If the data is dismal, the market will shift to the narrative of “stagflation”: a shrinking labor force coupled with energy-driven inflation expectations. This would be a heavy blow to the US dollar, while gold could see strong safe-haven buying.
Technical Outlook for Three Key Currency Pairs
1. US Dollar Index (USDX): Challenging Year-to-Date High
[USDX H4 chart]
The US dollar is currently under heavy pressure from the key psychological resistance zone of 99.00-99.30 (the January high). If the non-farm payroll data is strong, a daily close above this range would open up room for a move towards 100.00 ; conversely, if the data disappoints, the dollar will retest the 98.80 support level.
2. Euro/US Dollar (EUR/USD): Holding firm above the 200-day moving average.
[EURUSD Daily Chart]
Despite recent pressure on the euro, 1.1600 (close to the 200-day moving average) remains the last bastion for the bulls. If the non-farm payroll data fails to provide sufficient momentum for the dollar, the euro is expected to stage a technical rebound here.
3. Australian Dollar to US Dollar (AUD/USD): The Resilience of Commodity Currencies
[AUDUSD H4 chart]
Supported by the commodity market, the Australian dollar has performed exceptionally strongly, holding firmly above 0.7000-0.7100 (near a three-year high). If the US dollar weakens, the Australian dollar may challenge the 0.7100 ceiling; however, if the US dollar surges due to non-farm payroll data, the risk of falling below 0.7000 should be noted .
🚨 Weekend Risk Warning
With Friday’s close approaching, significant market volatility and profit-taking are expected. Institutional investors typically prefer to avoid holding excessive geopolitical exposure over the weekend. Please exercise caution with position management before and after the non-farm payrolls report to avoid being caught off guard by unexpected weekend news.
Author：Ultima Markets Daily Insight
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