US Dollar Index Plunges to 97.84 as Soft Wage Data Overshadows 115K NFP Beat

The US Dollar Index fell 0.23% to close at 97.84 during the New York session on Friday, breaking below the 100 level to hit a 10-week low after April average hourly earnings printed at a soft 0.2% month-over-month. The Labor Department reported an addition of 115,000 jobs in its Non-Farm Payrolls release, crushing the 62,000 consensus estimate. Traders aggressively sold the greenback across the board because the muted wage data eased cpi" title="Understanding inflation and CPI in forex">inflation fears, prompting a massive rotation into risk assets and safe-haven commodities.

The headline payroll beat initially triggered a brief spike in dollar demand, but the momentum reversed within minutes once algorithms processed the wage component. Average hourly earnings came in below the 0.3% forecast. The unemployment rate remained steady at 4.3%, while the Bureau of Labor Statistics revised March payroll figures upward to 185,000 new jobs from the previously reported 178,000. US equity markets reacted violently to the combination of strong hiring and softer wage growth. The S&P 500 climbed 0.8% to close at an all-time high of 7,398.93, while the Nasdaq composite rallied 1.7% to a record 26,247.08. Market participants priced in a soft-landing scenario, interpreting the data as a signal that the Federal Reserve will maintain its current policy trajectory without needing to hike rates further.

The institutional rush out of fiat cash pushed Bitcoin past the $80,000 threshold, trading at $80,380 during the afternoon session. Outgoing Federal Reserve Chair Jerome Powell confirmed he will remain on the central bank board as a governor after his term ends on the fifteenth of the month. The Federal Open Market Committee continues to hold its benchmark interest rate steady at a target range of 3.50% to 3.75%. The US Justice Department officially dropped its criminal investigation into Powell regarding the central bank renovation, clearing a political hurdle for Kevin Warsh to take over the chairmanship.

Euro Tests 1.1800 Resistance While Pound Clears 1.3600

EUR/USD pushed sharply higher against the weakening dollar, surging into the 1.1780 to 1.1800 resistance zone during European trade. The pair later entered a corrective pullback, stabilizing to close the week around the 1.1735 level. European Central Bank Executive Board member Isabel Schnabel warned in a speech that rising sovereign debt creates massive fiscal dominance risks for central banks. Schnabel cited International Monetary Fund projections showing US government debt hitting 142% of GDP by 2031, which drove additional capital flows out of the dollar and into European assets.

The Institute of International Finance reported on Friday that foreign demand for US Treasuries stalled in 2026. International investors increased their accumulation of European and Japanese sovereign debt to diversify their portfolios away from dollar dominance. A separate Friday report highlighted that the European Central Bank digital euro project faces significant delays, making a launch unlikely before ECB President Christine Lagarde completes her current term.

The British Pound staged a bullish breakout, pushing GBP/USD above the 1.3600 resistance level. The momentum in sterling stems directly from the Bank of England holding interest rates steady at 3.75%. Traders price in a hawkish stance from the Bank of England compared to the Federal Reserve, driving yield-seeking capital into the pound across the London session.

Yen Stalls Near 156.86 on Bank of Japan Intervention Warnings

USD/JPY traded cautiously in a tight 155.50 to 156.86 range during the Asian session. The Japanese Yen remains heavily supported by verbal warnings from Tokyo officials regarding currency manipulation. Traders avoided accumulating large long positions due to the looming threat of direct Bank of Japan intervention in the foreign exchange market.

The Bank of Japan voted 8 to 1 to hold its policy interest rate at 0.75% earlier this week. A newly released central bank report revealed that the inflationary impact of the weak Japanese Yen now exceeds the economic shock from rising global oil prices. The USD/JPY exchange rate slid toward the 156.60 level on Friday afternoon due to safe-haven flows triggered by Middle East tensions.

Gold Strikes $4,715 as Geopolitics Drive Safe-Haven Bids

Spot Gold prices jumped 1.23% to test key resistance at $4,712 per ounce, before settling higher at $4,715.24. The precious metal recorded a daily increase of $11.09 from Thursday, driven by the weaker dollar and renewed geopolitical tensions between the US and Iran in the Strait of Hormuz. In regional markets, 24-carat gold in India saw a marginal decline of 10 rupees to trade at 1,52,670 rupees per 10 grams, while silver prices rose by 100 rupees to reach 2,75,100 rupees per kilogram.

Energy markets experienced extreme volatility, which directly impacted commodity-linked currencies. West Texas Intermediate crude futures fluctuated between $94.68 and $95.47 per barrel. WTI posted a sharp weekly loss of 7.12% as traders balanced the risks of ongoing military clashes in the Strait of Hormuz against fragile ceasefire negotiations. Brent crude oil rose 0.43% to $100.49 per barrel on Friday, with some regional exchanges quoting prices as high as $101.08, though the global benchmark still recorded a 7.32% decline over the week.

The AUD/USD maintained a strong upward trajectory amid the commodity fluctuations, finding solid support near 0.7160. Buyers accumulated the Australian dollar throughout the London session, targeting the 0.7300 level as the broader S&P GSCI Commodity Index traded flat at 732.21 points. The commodity index remains up 37.75% compared to the same time last year, driven heavily by recent energy supply shocks.

Industrial metals showed mixed performance overnight, influencing the Australian dollar and other resource-heavy currencies. London Metal Exchange Copper rose over 1%, while Shanghai Futures Exchange zinc and tin fell 1.19% and 1.13%, respectively. In agricultural markets, July 2026 Chicago Wheat futures increased by 1.10% to $620.00, while Cocoa futures experienced a sharp 5.53% drop to $4,241.00.

Key Levels and Upcoming CPI Catalysts to Watch

You must monitor the 97.80 support level on the US Dollar Index as markets open on Monday. A sustained break below this floor opens the door for a rapid descent toward the 96.50 zone, an area untouched since late 2025. For EUR/USD, your primary upside target sits at the 1.1800 psychological barrier. Sellers will likely defend this area aggressively, making it a critical zone for support and resistance plays. If the euro fails to hold the 1.1735 level, expect a retracement toward 1.1680 before buyers step back in.

Your focus will shift entirely to the April Consumer Price Index release scheduled for Tuesday. Analysts forecast headline CPI to rise to 3.7% year-over-year, up from 3.3% in March. Core CPI, which excludes food and energy, prints an expected 0.4% month-over-month increase. You need to watch the core metric closely to see if inflationary pressures are broadening beyond the massive 21.2% monthly surge in gasoline prices recorded in March.

The New York Fed Staff Nowcast updated its second-quarter 2026 GDP growth estimate to 2.6% following the Friday payroll data. This represents an increase of 0.1 percentage points from previous estimates. If the Tuesday CPI data prints above the 3.7% consensus, you should anticipate an immediate reversal of Friday dollar weakness as bond yields reprice a higher terminal rate from the Federal Reserve.