USD Weakens Despite Strong Jobs Data as Fed Cut Bets Persist

The US dollar index fell 0.15% to 106.20 as markets maintained aggressive bets on a December Federal Reserve rate cut, despite better-than-expected employment data. The resilient jobs report, showing unemployment at 4.1% and wage growth at 3.9% year-over-year, failed to alter market expectations for monetary easing. Fed funds futures continue to price in a 85% probability of a 25-basis-point cut at the December 10 FOMC meeting, reflecting traders' conviction that the Fed will prioritize growth concerns over inflation risks. This divergence between strong data and dovish market positioning has created unusual dollar weakness across major pairs. Technical indicators suggest the dollar index could test support at 106.00, with resistance at 106.50. The disconnect between economic fundamentals and rate expectations presents both opportunities and risks for forex traders, particularly in USD crosses ahead of next week's Fed decision.