- The US dollar is stable on Thursday despite a series of key economic data from the US published.
- The operators see the president of the Fed, Powell, without commenting on the markets.
- The dollar index remains just below 101.00 and could move in any direction after a volatile Wednesday.
The American dollar index (DXY), which tracks the performance of the US dollar (USD) compared to six main currencies, is recovering the breath and quotes slightly downward just below the level of 101.00 at the time of writing on Thursday, before a fairly loaded US economic calendar. The US dollar is not really moving after the geopolitical unworthy of the US president, Donald Trump, who commented during his trip through the Middle East that nuclear conversations with Iran have good hope, while both Yemen and Syria deserve a second chance.
After the strong volatility of Wednesday that affected the Korean Won (KRW), the operators are looking at Asia in search of possible more monetary problems and evidence that the Trump administration is looking for a monetary agreement with countries in the region to devalue the US dollar.
Daily summary of market movements: Not enough substantial
- The US economic calendar began at 12:30 GMT with a series of data:
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- The initial weekly unemployment subsidy requests were 229,000, as expected and since 228,000 in the previous week. Continuous requests were softer at 1,881 million, exceeding the estimate of 1.89 million and from 1,879 million before.
- The NY Empire State manufacturing index for May only fell to -9.2, exceeding the expected -10, from -8.1 the previous month. The manufacturing survey of the Fed of Philadelphia for May was a surprise of -4, much better than the expected -11 and from -26.4 in April.
- The monthly general production price index in April was contracted -0.5%, where an increase of 0.2% and from the 0.4% drop in March was expected. The underlying IPP contracted -0.4%, failing the 0.3% estimate and compared to -0.1% before.
- April retail sales fell to only 0.1%, a small increase on 0% estimate and compared to 1.5% of the previous publication. Retail sales excluding cars and transport only increased 0.1%, failing the 0.3% estimate and compared to the 0.5% increase in March. That same 0.5% for March was 0.8% rise.
- The president of the Federal Reserve, Jerome Powell, delivered a speech on the review of the Fed framework at the Thomas Laubach Research Conference in Washington DC. Although the president of the Fed did not comment on any economic perspective in the short term or roads.
- At 13:15 GMT, monthly industrial production data will be published for April. An increase of 0.2% compared to -0.3% in March is expected.
- At 18:05 GMT, the Vice President of Supervision of the Federal Reserve, Michael Barr, will pronounce opening comments (through a pre -recorded video) in the credit symposium for small businesses of the Northeast/Medium Atlantic 2025.
- The shares are falling in all areas on Thursday, although there are no losses of more than 1% to report from Asia, through Europe and in the futures markets of US shares.
- The CME Fedwatch tool shows that the probability of an interest rate cut by the Federal Reserve at the June meeting is only 8.2%. Later, the decision of July 30 is likely that the rates are lower than the current levels at 38.6%.
- The yields of 10 years of the US are quoted around 4.53%, and continue to rise, approaching a maximum of a month.
Technical analysis of the dollar index: trapped between rates and risk
The US dollar index He saw the crucial technical level at 100.22 to stay firmly, delivering a small rebound for the US dollar on Wednesday. With the fall below 101.00, the DXY seems well positioned to move in any direction, promoted by US economic data publications later this Thursday. A return to 101.90 could materialize, while the downward support in 100.22 is not far.
On the positive side, 101.90 is the first great resistance again. He already acted as a crucial level throughout December 2023 and as a basis for the formation of inverted head and shoulders (H&S) during the summer of 2024. In the event that the dollar bundles pushing the even higher dxy, the simple mobile average (SMA) of 55 days in 102.06 will come into play.
On the other hand, the previous resistance in 100.22 now acts as a firm support, followed by the minimum of the year until the date of 97.91 and the crucial level of 97.73. Below, a relatively thin technical support appears at 96.94 before looking at the lowest levels of this new price range. These would be 95.25 and 94.56, which would mean new minimums not seen since 2022.
US dollar index: daily graphics
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
