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Despite a lethargic start to the week, the US Dollar Index (DXY) maintains yesterday's recovery gains. In spite of this, the DXY reestablishes its intraday high near 104.15 while extending the post-NFP rebound in the absence of significant data/events and amid mixed catalysts. In doing so, the greenback's index versus the six major currencies reflects the market's cautious optimism ahead of the US ISM Services PMI and Factory Orders, as well as the fresh concerns about US-China relations.

DXY rebounded from a weekly low after US Nonfarm Payrolls (NFP) rekindled hawkish Fed worries. In spite of this, the headline Nonfarm Payrolls (NFP) in the US employment report for May increased by 339K, compared to 190K expected and 294K previously (revised). Notably, the Unemployment Rate increased to 3.7% from 3.4% previously, exceeding market expectations of 3.5%. Noteworthy is the fact that Average Hourly Earnings decreased while the Labor Force Participation Rate remained unchanged.

Elsewhere, the Shangri-la Dialogue in Singapore rekindled geopolitical concerns surrounding the United States and China despite the absence of a meeting between the policymakers of both countries, as well as an incident indicating a rise in Sino-American naval war fears in the Taiwan Strait. In addition, news from the Russian Defense Ministry indicating large-scale military operations by Ukraine further dampens sentiment and supports the US Dollar.

In contrast, US President Joe Biden signed the debt-ceiling measure, averting a 'catastrophic' default. Also negative for the DXY were concerns that the main central banks may slow their rate hikes. Moreover, despite Friday's positive price movement, the global rating agencies continue to be cautious about the US financial market's credibility and exert pressure on the US Dollar. Reuters reported on Friday that Fitch Ratings would maintain a negative outlook on the United States' AAA credit rating despite the agreement that will enable the government to meet its obligations.

Wall Street closed higher, reflecting the atmosphere, and US Treasury bond yields recorded their first weekly decline in four weeks. Notable is the fact that S&P500 Futures have posted modest losses amid conflicting sentiment.

US Factory Orders for April and ISM Services PMI for May will be crucial for intraday direction as the latest US employment report renews the Federal Reserve's (Fed's) hawkish bias and keeps the US Dollar on the radar of buyers.

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