USD Strengthens on Positive Labor Market Data and Rising Yields

The dollar index rose 0.22% today, supported by encouraging US labor market indicators and climbing Treasury yields. Fresh employment data revealed unexpected strength in the US jobs sector, diminishing expectations for aggressive Federal Reserve rate cuts in 2025. The positive labor market momentum has pushed yields higher across the curve, with the 10-year Treasury yield advancing significantly. This yield differential is attracting flows into dollar-denominated assets, pressuring major pairs like EUR/USD and GBP/USD lower. Market participants are recalibrating their Fed policy expectations, with the probability of near-term rate cuts declining. Technical analysis shows the dollar index breaking above key resistance at 106.00, targeting 106.50 next. The combination of robust employment figures and attractive yields suggests continued dollar strength, particularly if upcoming economic data confirms the labor market's resilience.