USD/THB advances on the sign of strength of the US economy

• USD/THB bulls gain momentum, with the pair posting a 0.56% rally.
• Favorable PMI data and stable unemployment numbers, coupled with the Federal Reserve's unwavering stance, support the USD.
• Markets give up hopes for a September cut by the Fed.

The USD/THB pair is gaining strength and reached 36.60 on Thursday, due to the Federal Reserve's (Fed) persistent hawkish stance on keeping interest rates high. This is supported by better-than-expected manufacturing PMI data and low US jobless claims, providing a favorable economic environment.

The latest US data showed a robust PMI reading for May, beating expectations with the Manufacturing PMI at 50.9, up from 50.0 in April, and beating the forecast of 50.0. The Services PMI also saw an impressive rise, reaching 54.8 from April's figure of 51.3, significantly exceeding the forecast of 51.3.

Additionally, the US Department of Labor declared a smaller-than-expected increase in unemployment benefits, marking another positive note for the US economy. All of these factors, combined with the Federal Reserve's firm commitment to maintaining high interest rates, benefited the dollar against its peers on Thursday. In this sense, according to CME's FedWatch tool, markets have practically abandoned hopes of a cut by the Fed until September. At that month's meeting, investors now see only a 40% chance that the easing cycle will begin.

USD/THB technical analysis

From a daily point of view, the RSI shows a transition from negative to positive territory. Market dynamics quickly moved from oversold to a positive trend, with the latest RSI reading above the midline. Buyers appear to have gained control, offsetting earlier losses and establishing a more optimistic outlook.

The moving average convergence divergence (MACD) histogram, showing decreasing red bars, supports this trend. This indicates a decline in negative momentum, in line with the bullish context presented by the RSI above.

USD/THB Daily Chart