US private-sector hiring eased in late May, according to the NER Pulse companion to the ADP National Employment Report. Employers added an average of 29K jobs per week over the four weeks to May 23, down from 35.75K in the prior reading, indicating softer momentum than a week earlier. A correction dated June 9 at 15:16 GMT amended the first figure to 29K from 35.75K.
The US Dollar Index (DXY) slid to two-day lows, returning below 100.00 to 99.70, while the spot reading on the daily chart was 99.72. Price remains above the 55-day, 100-day and 200-day SMAs clustered just under 99.00; RSI sits around 59 and ADX near 23. Support levels are seen at 99.50, then 98.99, with a broader zone at 98.59–98.64 and further support at 97.62. Resistance is flagged at 100.39 and 100.64, with 101.98 above.
Cooling Labor Market and Federal Reserve Outlook
We are seeing signs of a cooling labor market, with private job gains slowing in late May. This softening trend suggests the US economy may be losing momentum. For derivative traders, this raises questions about the Federal Reserve’s path and the strength of the US dollar.
This view is supported by other recent statistics. For example, the latest Institute for Supply Management (ISM) Manufacturing PMI for May 2026 registered at 49.5, indicating a slight contraction in the sector for the second consecutive month. This, combined with a recent Consumer Price Index (CPI) reading showing inflation moderating to a 2.8% annual rate, reduces the pressure on the Fed to remain aggressive.
Derivatives Strategy and Technical Levels
Given this backdrop, we see opportunities in options on US dollar index futures. We believe purchasing put options with a strike near the 99.50 support level offers a good risk-to-reward for a continued slide. Selling out-of-the-money call options above the 100.64 resistance is another strategy to consider, designed to profit if the dollar remains range-bound or drifts lower.
Historically, periods of weakening employment data, such as the slowdown observed in mid-2019, have often preceded a more dovish shift from the Federal Reserve. That period saw the dollar’s upward trend stall as the market began pricing in rate cuts. We may be entering a similar phase, making interest rate futures that bet on a Fed pause or pivot increasingly relevant.
The technical picture provides a clear roadmap for our positions. The cluster of simple moving averages around the 99.00 level represents a critical support zone to watch. A break below this area would confirm a deeper bearish trend, prompting us to add to short-dollar positions.
