The U.S. dollar index (DXY) tumbled 1.05% to 95.32 on Friday, immediately after the release of the nonfarm payrolls report by the U.S. Labor Department showing that just 142,000 jobs were added to the economy in September. The jobs report came in well below Wall Street economists' expectations of 203,000, missing expectations for four straight months. The August figures were also revised sharply downward from 174,000 to 136,000, missing the original economists’ forecast of 222,000. 

The U.S. unemployment rate remained at 5.1%, the lowest since early 2008, as more than 350,000 people left the labor force in September, pushing the labor force participation rate to a 38-year low of 62.4%, meaning 94.6 million Americans, 16 years and older, did not have a job and were not actively trying to find one.

Some traders had hoped that Friday's U.S. nonfarm payrolls data could help strengthen, or weaken, the case for the Federal Reserve raising interest rates before the end of the year, thus setting the tone for the dollar. None of the above happened, as the DXY bounced back to close at 96.11, down 0.23% for the day.

The dollar regained some strength after James Bullard, President and CEO of the Federal Reserve Bank of St. Louis, came out a couple of hours after the release of the jobs report and said that arguments that the U.S. or global economy have fundamentally changed are not compelling, or adequate to keep the Fed from raising interest rates, given the drop in unemployment and likelihood of continued growth. Mr. Bullard practically said the Federal Reserve should not delay the rate hike. Since Mr. Bullard is currently a nonvoting member of the FOMC, he can say whatever he wants.

The financial market seems to disagree with Mr. Bullard, though. The federal funds futures, commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate just 5% odds for a quarter-point rate hike at the October 28 policy meeting, while the odds for a rate hike at the December 16 meeting have dropped to 30% from 41% registered on September 30, according to data from CME Group as of October 2.

On Thursday, global outplacement firm Challenger, Gray & Christmas reported that U.S.-headquartered companies cut a total of 58,877 jobs last month, up 43% from 41,000 job cuts in August. The layoff count in the third quarter of this year stands at 205,759, the worst quarter for job cuts in six years. Year-to-date, employers have announced plans to cut about 493,431 jobs in 2015, more than the full-year total of 483,171 in 2014.

A mixed bag of U.S. and eurozone economic data has kept the dollar from a breakout since mid-September. The U.S. Commerce Department said on Friday that factory orders declined 1.7% in August after a slight gain of 0.2% in July, citing weak demand in commercial airplanes and cutbacks in investment by energy companies. Economists had expected factory orders to fall by 1.3%. 

The Institute for Supply Management (ISM) said on Thursday that its manufacturing purchasing managers index slipped to 50.2 in September from 51.1 in August, the lowest level since May 2013, noting soft global growth and the relative strength of the dollar. A reading above 50 indicates the expansion in the manufacturing sector. Economists surveyed by The Wall Street Journal had expected the index to fall to 50.8. Manufacturing has been under stress this year as the strong dollar has hurt export sales.

The European statistics agency Eurostat said on Wednesday that the eurozone consumer price index (CPI) fell 0.1% in September from a year earlier, compared to expectations for a flat reading, following a 0.1% increase in August. The Core CPI, which excludes food, energy, alcohol, and tobacco costs, increased by a seasonally adjusted 0.9% in September, in line with the forecasts and unchanged from August.

European Central Bank (ECB) President Mario Draghi said last Wednesday at the ECB meeting in Frankfurt, that the bank is prepared to beef up its bond-buying program if inflation weakens more than currently expected. Mr. Draghi also said that “if needed,” the program could “go beyond” September 2016.

Technically, the DXY index has been trading in a symmetrical triangle, a trading band between 93.39 and 98.14, since late April. In the short-term, the U.S. dollar index is unable to break out of the 96.27 level, or 50% Fibonacci retracement, and a bearish ascending wedge has emerged. In an ascending wedge breakdown event, the projected DXY target is 92.78. There are supports at 93.50 and 93.39.

While some top Federal Reserve officials are still pushing for a rate hike later this year, or until December, the DXY could bounce off the low within the trading band between 93.39 and 98.14. The dollar may get some support if the eurozone economy turns more negative.