FX.co ★ DXY Rebounds after Jobs Report

The dollar index rebounded to near 97 after three consecutive sessions of losses, supported by stronger-than-expected US employment data that tempered expectations for Federal Reserve rate cuts. Nonfarm payrolls increased by 130,000 in January, the largest monthly gain in more than a year, while the unemployment rate unexpectedly declined to 4.3%, indicating a stabilizing labour market at the start of 2026. In response, traders pared back bets on monetary easing: markets now anticipate the next Fed rate cut in July rather than June, and assign less than a 5% probability to a move in March. Interest rate swaps are currently pricing in about 49 basis points of easing by December, down from roughly 59 basis points previously. The Fed left rates unchanged in January amid persistently elevated inflation and evidence of labour market resilience, although two policymakers dissented in favour of an additional cut.