- The US dollar stabilizes further on Thursday with traders preparing for US data.
- US President Trump is set to speak at the World Economic Forum in Davos.
- The US Dollar Index (DXY) is back above 108.00, although it faces slight selling pressure again.
The US Dollar Index (DXY), which tracks the value of the Dollar against six major currencies, is stabilizing further and attempting to recover towards levels seen last week ahead of US President Donald Trump’s inauguration. . There is still a long road to recovery, although after a few days with a nearly empty US data calendar, traders can prepare for a rebound in the upcoming releases. Positive and optimistic data could put inflation concerns back on the agenda, driving higher rates and a stronger US dollar again.
Meanwhile, the US economic calendar is beginning to take shape with weekly jobless claims and the Kansas Fed Manufacturing Activity Index. All of this precedes the release of S&P Global Purchasing Managers’ Index (PMI) numbers on Friday. Later this Thursday, US President Trump will also appear virtually at the World Economic Forum in Davos, where he will give a speech.
Daily Market Summary: Finally Some Data
- At 13:30 GMT, weekly jobless claims for the week ending January 17 will be published. Initial claims are expected to rise to 220,000, from 217,000 in last week’s count. Continuing claims for the week of January 10 are expected to increase to 1.86 billion, from 1.859 million previously.
- At 16:00 GMT, the Kansas Fed will release its manufacturing activity survey for January. No forecast available, with the previous reading at -5.
- In that same time frame, US President Donald Trump will make a virtual appearance at the World Economic Forum in Davos.
- Stocks are showing weakness this Thursday, facing profit-taking after their broad rally throughout the week.
- The CME FedWatch tool projects a 57.1% probability that interest rates will remain unchanged at current levels at the May meeting, suggesting a rate cut in June. The Federal Reserve (Fed) is expected to continue to rely on data with uncertainties that could influence inflation during US President Donald Trump’s term.
- The US 10-year bond yield is trading around 4.619%, far from its poor performance seen earlier this week at 4.528% and still has a long way to go to return to the more than one-year high from last week at 4.807%.
US Dollar Index Technical Analysis: US data could put inflation back on the agenda
The US Dollar Index (DXY) stops its correction and consolidates around 108.00 on Thursday. Upcoming US economic data this week could put inflation concerns back on the agenda with higher rates and a stronger US Dollar as a result.
If the recovery in the DXY wants to continue its ascent, the crucial level to beat is 109.29 (July 14, 2022 high and ascending trend line). Further up, the next big upside level to reach before advancing further remains 110.79 (September 7, 2022 high). Once beyond there, it’s a big jump to 113.91, an October 2022 double top.
To the downside, the first area to watch is 107.80-107.90, which sustained this week’s correction. Further down, the convergence of the October 3, 2023 high and the 55-day SMA around 107.50 should act as a double safety feature to catch any declines.
Dollar Index: Daily Chart
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.