US Dollar Index (DXY) Breaks 99 Level for the First Time Since December 10 Last Year

The US Dollar Index (DXY) has broken through the 99 level for the first time since December 10, signaling a resurgence in the greenback's strength. The index, which measures the dollar against a basket of major currencies, has surpassed its 200-day simple moving average and is flirting with multi-week highs.

The move coincides with growing anticipation for the upcoming US Nonfarm Payrolls report, which will be released at the end of the week. Traders are closely watching for signs of labor market resilience as the Federal Reserve prepares to reassess its monetary policy stance.

Analysts suggest the dollar's gains reflect a combination of strong economic fundamentals and positioning changes ahead of key macroeconomic data releases. Market participants are preparing for potential volatility as critical reports and central bank speeches shape the week's outlook.

Why the Move Happened

The US Dollar Index's upward movement reflects renewed investor confidence in the greenback's strength. The index has maintained a bullish bias for most of 2026, supported by expectations of a robust labor market and potential rate cuts later in the year. The recent break above the 99 level also aligns with the dollar's ability to outperform against major peers, including the euro, pound, and yen.

The EUR/USD pair has continued its bearish trend, testing the 55-day simple moving average near 1.1640. The pair's weakening has been driven by concerns over the eurozone's economic outlook, particularly from Germany's sluggish industrial production and trade balance data.

GBP/USD remains under pressure, with the pair retreating to the 1.3420-1.3415 range for the third consecutive session. The pound's weakness has been attributed to ongoing uncertainty in UK economic data and political developments ahead of key policy decisions.

How Markets Responded

USD/JPY has also seen modest gains, with the pair briefly surpassing the 157.00 barrier. The yen's weakness is a function of both the Bank of Japan's tightening policy and the broader dollar rally across global markets.

AUD/USD has been under bearish pressure, with the pair breaking below the 0.6700 support level after three days of declining prices. The move reflects the broader trend of risk-off sentiment among traders and the dollar's continued dominance in the currency market.

In commodities, the US benchmark WTI crude oil prices have seen a brief rebound after two days of losses, with traders watching closely for developments in Venezuela's oil production. Meanwhile, gold prices have hit three-day lows, pressured by the stronger dollar and higher Treasury yields.

What Analysts Are Watching

Market participants will closely monitor the release of the US Nonfarm Payrolls data at the end of the week. The report will provide insight into the labor market's health and may influence expectations for the Federal Reserve's upcoming policy decisions.

Meanwhile, the European Central Bank and other major central banks will also be in the spotlight. ECB's Lane will speak later in the week, providing further insight into the bloc's economic outlook and potential policy shifts.

The broader global economic landscape will also remain in focus, with South Korea seeking to address its 'Korea discount' by extending FX market hours to 24 hours a day. The move, expected to begin in July, is part of a broader plan to position the country for potential inclusion in MSCI's developed market index.