- The US Dollar weakens slightly after German PMIs came in stronger than expected.
- This week’s risk-off tone, which has been supporting the Dollar, is receding.
- The US Dollar Index turns lower for support after hitting a nearly three-month high on Wednesday.
The US Dollar (USD) weakens slightly on Thursday ahead of a busier day in terms of US data releases, with October Purchasing Managers’ Indices (PMI) data the main event. Earlier on Thursday, European PMIs were mixed, with France contracting further across all sectors and Germany posting better-than-expected readings. Still, except for the German services PMI, all readings for both countries – which are the largest economies in the Eurozone – remain in contraction territory.
The US calendar will also offer PMI data, which will give an idea about the state of the economy. In addition to these, weekly jobless claims numbers and activity trackers from the Chicago Fed and Kansas City Fed will create some additional volatility.
Daily Market Summary: Big Data
- Thursday’s calendar begins at 12:30 GMT with the Chicago Fed National Activity Index and weekly jobless claims figures. Initial claims are expected to rise to 242,000 from 241,000 last week.
- At 13:45 GMT, S&P Global will release its preliminary readings for October PMIs:
- The services PMI is expected to remain largely stable at 55.0 from 55.2 in September.
- Manufacturing PMI is expected to rise, although it remains in contraction at 47.5 versus 47.3 previously.
- The composite reading stood at 54.0 in September, no forecast available for October.
- At 15:00 GMT, the Kansas Fed manufacturing activity tracker for October will be released. There is no consensus available, and the previous reading was -18.
- The equity world turns upside down on Thursday, with China lagging for the first time this week while European and US stocks finally post some gains.
- The CME’s Fedwatch tool supports a 25 basis point (bps) rate cut with a 93.0% probability versus a 7.0% probability of no rate cut by the next Fed meeting on November 7.
- The US 10-year benchmark rate is trading at 4.19% and is trading below its high of 4.24% seen on Wednesday.
DXY Dollar Index Technical Analysis: It is not a straight line
The US Dollar rally, as measured by the US Dollar Index (DXY), takes a pause. As with everything in the financial markets, there is never a straight line to multiple consecutive trading sessions, and a pause to cool off the rally a bit is more than welcome. Don’t be surprised to see a bit of a reversal as markets are still very positioned for more US Dollar strength ahead of the upcoming US elections on November 5.
The DXY has broken above 104.00 and is in an empty area that could quickly see 105.00 emerge as the first limit to the upside. Once above that level, keep an eye on the key level of 105.53 (April 11 high) and 105.89 (May 2 high). Ultimately, 106.52 (April double top) or even 107.35 (October 3, 2023 high) could show strong resistance and selling pressure with profit taking on the rally that would materialize at these levels.
On the downside, the 200-day SMA at 103.81 emerges as very strong support. Watch for false breakouts and consider waiting for a daily close below that level when reassessing whether there will be further declines for the DXY. The next major support is twofold, with the 100-day SMA at 103.19 and the key level at 103.18 (March 12 high). If that level is broken, it would lead to a big drop to the 101.90 support zone, with the 55-day SMA at 101.93.
Dollar Index: Daily Chart
The US Dollar FAQs
The United States 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 alongside local banknotes. According to 2022 data, it is the most traded currency in the world, with more than 88% of all global currency exchange operations, equivalent to an average of $6.6 trillion in daily transactions. After World War II, the USD took over from the pound sterling as the world’s reserve currency.
The single most important factor influencing the value of the US Dollar is monetary policy, which is determined by the Federal Reserve (Fed). The Fed has two mandates: achieve price stability (control inflation) and promote full employment. Your main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% target set by the Fed, the Fed raises rates, 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 enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. This is an unconventional policy measure used when credit has dried up because banks do not lend to each other (for fear of counterparty default). It is a last resort when a simple lowering of interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy US government bonds, primarily from financial institutions. QE usually leads to a weakening of the US Dollar.
Quantitative tightening (QT) is the reverse process by which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest the principal of maturing portfolio securities 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.