The U.S. Dollar closed higher against a basket of peers on Friday, after a better-than-expected U.S. employment report pointed to a tight labor market that could encourage the U.S. Federal Reserve to continue with its aggressive rate hike plans.

On Friday, June U.S. Dollar Index futures settled at 102.160, up 0.328 or +0.32%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $27.30, up $0.12 or +0.44%.

Jobs Report Supports Fed’s Hawkish Stance

Nonfarm payrolls increased by 390,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Economists polled by Reuters had forecast payrolls increasing by 325,000 jobs in May. The Unemployment Rate and Average Hourly Earnings held steady at 3.6% and 0.3%, respectively.

The better-than-estimated job increase indicates the economy is still strong, while the dip in average hourly wages suggests growth is starting to moderate amid a rebound in the labor force.

Specs Lightening Up on Long-Side

Despite the outlook for higher rates, the market is indicating that this assessment has been already priced into the dollar. Government data indicates traders are unwinding long dollar positions. However, a few traders may still be buying the dollar for safe-haven protection.

Speculators’ net long bets on the U.S. Dollar fell to a 5-week low, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

The value of the net long dollar position was $14.71 billion for the week-ended May 31. Last week, speculators’ net long position stood at $17.65.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 102.750 will change the main trend to up. A move through 101.420 will signal a resumption of the downtrend.

The main range is 97.730 to 105.065. Its retracement zone at 101.395 to 100.530 is support.

The intermediate range is 99.810 to 105.065. The index is currently testing its retracement zone at 102.440 to 101.815.

The short-term range is 105.065 to 101.420. If the main trend changes to up then look for a test of its 50% level at 103.245.

Daily Swing Chart Technical Forecast

Trader reaction to 101.817 is likely to determine the direction of the June U.S. Dollar Index early Monday.

Bullish Scenario

A sustained move over 101.820 will indicate the presence of buyers. The first target is 102.440, followed by the main top at 102.750. Taking out this level will change the main trend to up with 103.245 the next target.

Bearish Scenario

A sustained move under 101.815 will signal the presence of sellers. The first target is a support cluster at 101.420 – 101.395. Crossing to the weak side of the 50% level at 101.395 will indicate the selling pressure is getting stronger. This could trigger a plunge into the Fibonacci level at 100.530.