US Dollar Blazes Higher on Solid Data as Geopolitics Play Out. Where to for USD？

The US Dollar continues to fight back after a blistering jobs report on Friday showed that the Fed might have more heavy lifting ahead to rein in inflationary pressures.

The ramifications of the massive beat of US total nonfarm payrolls (NFP) data continued to play out through the Asian session on Monday.

517k jobs were added in January according to the US Bureau of Labour Statistics, way above the 188k anticipated and last months read of 223k was also revised up to 260k. This put the unemployment rate at 3.4%, below the 3.6% forecast and 3.5% previously.

Treasury yields are higher, adding to large gains seen at the end of last week with the 2-year part of the curve seeing the most gains as it trades back above 4.30% after visiting 4.04% last week.

The Aussie and Kiwi Dollars have been hardest hit in the currency space as high beta risk assets tumble on the prospect of tighter monetary policy from the Fed.

USD/JPY is notably higher after the Nikkei newspaper reported that Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya has been sounded out to take the top job when Haruhiko Kuroda steps down in April.

He is seen as maintaining the current relatively loose policy. The Nikkei 225 equity index bucked the broader weakness in stock markets, trading in the green. Hong Kongs Hang Seng index was down over 2.3% at one stage

Gold is languishing near Fridays low under US$ 1,870 an ounce. Similarly, crude oil is struggling to make headway with the WTI futures contract trading near US$ 73.30 bbl while the Brent contract is below US$ 80 bbl.

Looking ahead, there will be a number of speakers from the Bank of England today.

The full economic calendar can be viewed here.

DXY (USD) INDEX TECHNICAL ANALYSIS

The DXY Index has recovered from a seven-month low but remains within a descending trend channel.

Resistance could be at the breakpoint 103.42 or further up and the prior peaks of 105.63, 105.82, 107.20 and 107.99.

On the downside, support may lie at the breakpoint of 101.30 or down at the previous lows of 100.82, 9957 and 99.42.