This morning’s Non-Farm Payrolls report came-in below expectations, printing at +261k versus the expectation of +313k. While this is the largest number of jobs added in an NFP report in over a year, it’s still a sizable miss. But the miss on the headline number probably isn’t the most disconcerting aspect of this morning’s jobs report, as Average Hourly Earnings came-in underneath the 2.7% expectation, printing at 2.4%; well below last month’s 2.8% showing that helped to offset the terrible headline number of -33k.

This is relevant because it shows additional softness in inflation ahead of the Fed’s expected December hike. The expectations that have been building around that December move and, further, additional hikes in 2018 have finally started to bring some strength into the Dollar after a troubling first three quarters of the year. But it wasn’t anything directly Dollar-related that brought last week’s topside breakout, as USD surged after the ECB extended their QE program. This led-in to fresh three-month highs which have held throughout this week. On Wednesday we looked at a zone of support in DXY that runs from 94.30 up to 94.44. The 94.30 level comes from the 38.2% retracement of the 2014-2017 major move in DXY, and 94.44 comes from the swing-low that showed on Monday of this week.

U.S. Dollar via ‘DXY’ Four-Hour: Bullish Trend Holds Higher-Low Support After NFP

Is this Enough to Deter Dollar Strength?

Given the current backdrop, likely not. With the ECB kicking the can for stimulus exit to sometime next year after last week’s dovish outlay, and with the Bank of England dressing up yesterday’s rate hike as a ‘one and done’, there are simply few economies looking at higher rates in the near-term; and this could further support long-USD flows after the back-breaking down-trend that showed in the first nine months of this year. On the four-hour chart below, we’re looking at a series of resistance levels based on this year’s price action that could be usable for topside continuation in USD. Traders can look for prices to test the next resistance level, at which point the higher-low support could be sought out at one of the prior resistance levels.