Market Analysis Summary: US Dollar Index (DXY) and Economic Outlook
Author: Elior Manier
Date: February 6, 2026
Overview
The US Dollar Index (DXY) is currently testing the 98.00 level, showing signs of potential weakness ahead of the upcoming Non-Farm Payroll (NFP) report. Recent labor data, including JOLTS and jobless claims, have indicated unexpected weakness, raising concerns about the stability of the US employment market.
Market Dynamics
Recent market volatility has been influenced by various factors, including geopolitical tensions, the nomination of a new Federal Reserve Chair, and a tech sector selloff. The dollar and US Treasuries have made a comeback after being sidelined, as capital flows shifted away from precious metals.
Since the Trump administration's comments on the dollar's value, the US dollar has rebounded against most major currencies, but the recent rally may be losing momentum.
Labor Market Indicators
While initial jobless claims have trended lower, recent reports have shown an increase in claims and a tighter job market, reminiscent of conditions seen in 2009. This has led to a risk-off sentiment in the markets, with traders anticipating a softer NFP report.
Technical Analysis of DXY
The DXY has been rangebound between 96.00 and 100.00 since July 2025. The current resistance at 98.00 is critical, as the dollar's inability to breach this level could indicate a shift in trend. The daily Relative Strength Index (RSI) suggests potential weakness, with the dollar facing rejection at resistance levels.
Key Levels to Watch
Resistance Levels:
- 98.00 - Key Mid-Range Resistance
- 99.40 to 99.50 - January Resistance
- 100.376 - November highs
Support Levels:
- 97.25 to 97.60 - August Pivot
- 96.50 to 97.00 - Major support
- 95.00 - Psychological support
Conclusion
As the market awaits the NFP report, traders should remain cautious. The dollar's performance against major currencies will be closely monitored, especially in light of potential geopolitical developments that could impact market sentiment.