Dollar Under Pressure: Can Friday's NFP Turn the Tide?

The US dollar is losing ground — and Friday's jobs report could decide whether the selloff gets worse.

The Dollar Index (DXY) slipped to 101.20 on Thursday, its lowest level in a month, after Democrats secured control of both the Senate and House. The euro climbed to around 1.1241, while the yen strengthened to 158.25 against the dollar.

The election result has changed the mood in currency markets. Investors expect greater political gridlock in Washington, which could limit Trump's spending plans. Hopes for easing tensions in the Middle East have also pushed oil prices sharply lower, taking some pressure off inflation and US Treasury yields.

Both developments have weakened the dollar.

But don't count the dollar out just yet.

There is still a reason for dollar bulls to stay in the game. October's US private payrolls increased by 86,000, beating market expectations of 69,000. Markets are also pricing in roughly an 81% chance of a Fed rate hike in December.

That makes Friday's US non-farm payrolls report especially important. Strong job growth could revive demand for the dollar by reinforcing expectations of tighter Fed policy. A weak reading, however, could add to selling pressure.

Key Dollar Levels to Watch

The Dollar Index is trading near 101.20, with the short-term trend still under pressure.

1. 101.27–101.72: Resistance zone. A move back above this area could help the dollar stabilise.
2. 101.20: Immediate support. A clear break lower would expose further downside.
3. 100.86: Next downside target if selling continues.

For EUR/USD, the dollar's weakness remains supportive, but Friday's jobs data could quickly change the direction.

The dollar is at a crossroads. One jobs report could turn this week's selloff into a deeper decline — or give dollar buyers a reason to fight back.