SINGAPORE, Oct 7 Reuters The U.S. dollar edged down on Monday after a rally sparked by Friday39;s strong U.S. jobs data and an escalation in the Middle East conflict.

The dollar39;s gains followed a U.S. jobs report that showed the biggest jump in six months in September, a drop in the unemployment rate and solid wage rises, all pointing to a resilient economy and forcing markets to reduce pricing for Federal Reserve rate cuts.

Many of the factors that weighed on the greenback through the summer had reversed, analysts said, mentioning fading recession concerns and a price action suggesting the limits of pricing a dovish reaction function have been reached with this dataset.

We cannot see a driver for rebuilding structural U.S. dollar short positions in the next couple of weeks, said Francesco Pesole, a forex strategist at ING.

Markets appear to have given up on another 50 bps cut, and inflation figures shouldnt change that, and while the Middle East situation may not spiral further, the consensus seems to be that a material deescalation isnt likely for now, he added.

The dollar index measure against major peers was down 0.05 at 102.48. It rose 0.5 on Friday to a sevenweek high, logging more than 2 gains for the week, its biggest in two years. It was slightly above 100 early last week.

MUFG flagged that it is the second time the dollar index has fallen back towards support at the 100.00level in recent years. On the last occasion in July 2023, the greenback index…