The Dollar Index is about to end the week higher, after a recovery of the greenback against European currencies and the yen. The index bottomed on Tuesday at 91.54, the lowest since January 2015 and then rebounded.

On Friday, the index dropped sharply after the release of the US employment report, falling to 92.03. It reversed quickly and rose back above 92.50. 

According to the report, non-farm employment rose 156K in August, below the 180K expected while average hourly earning increased 0.1%, under 0.2% of market consensus. The data pushed the greenback sharply lower. 

US August NFP consistent with economic growth – Wells Fargo

Afterward manufacturing data showed that the sector continued to expand in August. The ISM surprised to the upside, it came in at 58.8, the highest since 2011 and fueled the rebound of the greenback. 

Take the ISM with a Grain of Salt

The DXY peaked at 92.88 and the pulled back. During the last hours, it has been hovering around 92.75, up 0.32% from the level it had a week ago. 

Outlook 

The Dollar Index is rebounding from multi-year lows and after a spike lower, but the bounce so far does not look strong enough. If it rises back above 93.50, the greenback could gain support for a more significant correction. Despite the recent recovery, the daily chart still shows the index under pressure. 

Risks continue to be tilted to the downside. Next week, in terms of data, is quiet in the US with the main reports being Factory Orders on Tuesday and ISM non-manufacturing on Wednesday. The European Central Bank meeting on Thursday is the main risk event. The euro has a 54% weighting in the DXY. 

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