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US Dollar Trades Higher Following Strong S&P Global PMIs and Positive Jobless Claims Data

  • May PMI data and weekly jobless claims exceeded expectations and gave wings to the dollar.
  • The dollar is also posting gains following Wednesday's relatively hawkish Federal Open Market Committee (FOMC) Minutes.
  • The chances of a cut in September continue to decline.

He US Dollar Index (DXY) It is currently trading at 104.90, slightly higher, and has managed to erase all of its daily losses. This upward trajectory is driven by strong S&P Global surveys known as the Purchasing Managers' Index (PMI) and encouraging weekly jobless claims numbers, both indicative of a healthier US economy.

The US economy shows strength, and the Fed's caution keeps the dollar afloat. Next week's April personal consumption expenditure (PCE) figures will determine the short-term trajectory.

Daily Market Moves Summary: DXY Strengthens Following Encouraging PMI Data

  • The US S&P Global Manufacturing PMI rose to 50.9 in May, up from 50.0 monthly in April, beating economists' forecast of 50.0.
  • The services PMI rose to 54.8 from 51.3 in the previous month, beating the prediction of 51.3 on a monthly basis.
  • The May Composite PMI stood at 54.4, a significant monthly jump from 51.3 in April, and surpasses the expected decline to 51.1.
  • The U.S. Department of Labor reported 215,000 employment insurance beneficiaries in the week ending May 18, down from the estimate of 220,000 and the previous week's figure of 223,000, implying a market resistant work.
  • The Fed maintains a reserved approach to monetary policy changes, while advocating for remaining patient before starting to cut.
  • The odds of a cut at the September meeting fell below 40%, according to CME's FedWatch tool.

DXY Technical Analysis: DXY faces mixed medium-term outlook as bears and bulls battle for dominance

The indicators on the daily chart reflect a sort of stalemate between the bullish and bearish outlooks. Even as the bears struggle to gain ground, the index remains above the 100- and 200-day simple moving averages (SMA), a testament to the presence and resistance of buying momentum. However, it flirts with negative territory, suggesting that a bearish leg could be on the way.

On the other hand, the moving average convergence divergence (MACD) presents flat red bars, a neutral to bearish signal that could indicate a possible change in momentum or the continuation of the sideways movement.

Source: Fx Street

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