USD gains momentum before NFP, DXY at highest since July

The US dollar rose across the board the day before the release of the US employment report. Greenback extended weekly gains as investors appear to discount positive labor market numbers that could increase the odds of a rate hike from the Federal Reserve during 2016. 

The rally of the US dollar also pushed gold to the downside. The value of the ounce tumbled to $1250 hitting a fresh 3-month low and extended the weekly decline to more than $60. Crude oil prices rose 1.35%. 

In the forex market, the US dollar moved with an upside bias all day and near the end of the session was trading at daily highs in most crosses. EUR/USD was below 1.1150 while GBP/USD at fresh decade lows near $1.2600. USD/JPY climbed above 104.00. 

Looking at key trendline before NFP

The US Dollar Index, which gauges the dollar against its main rivals, rose from 96.10 to 96.70, reaching the strongest level since July 27. It was holding at the top, ahead of the US employment report. Also tomorrow there will be speeches from FOMC members (Fischer, Mester and George). 

Market consensus point to an increase of 172K in NFP and risks appear to be tilted on the upside after the latest round of US economic data, including the decline today in initial jobless claims below 250K, near the lowest since 1973. 

Today’s rally brought the DXY near a relevant dynamic resistance that is a downtrend line coming from December highs that stands around 96.90. A break higher could open the doors to medium-term gains in the USD.