The US Dollar Index (DXY), which monitors the strength of the US Dollar (USD) against six major currencies, has reached a resistance level and dropped to 99.47 on Friday. This decline was caused by news that China is considering tariff negotiations with the Trump administration. Investors are closely monitoring these trade developments and eagerly awaiting the first official trade deal. In other news, a smaller mineral deal between the US and Ukraine was signed, but it does not include any military guarantees for Ukraine, according to Bloomberg. On the economic front, the Nonfarm Payrolls (NFP) data for April exceeded expectations at 177,000, resulting in a minor strengthening of the US Dollar. However, investors are anticipating a potential downturn in the next NFP release in June.

The US Dollar Index (DXY) reached a significant technical level on Friday after three days of gains. The Nonfarm Payrolls data for April could dictate the movement of the DXY on Friday, and a continuation of the positive trend could lead to a break above the 100-point mark. However, even if the DXY manages to surpass this level, it could still face resistance and drop to new three-year lows. On the upside, the first level of resistance for the DXY is at 100.22, followed by the round number of 100.00, which could act as a bullish signal. If the DXY continues to rise, it could potentially reach the levels of 101.90, which were significant in December 2023 and formed the inverted head-and-shoulders (H&S) pattern during the summer of 2024.

On the downside, any major negative news could result in a test of the support level at 97.73. If the DXY continues to decline, it may reach the relatively thin technical support of 96.94 before hitting lower levels. These levels sit at 95.25 and 94.56, indicating new lows not seen since 2022.