US Dollar advances amid resilient US labor market

• The DXY Index rose to 103.90, up by 0.30%.
• US weekly Initial Jobless Claims came in better than expected, but Durable Goods Orders from October were disappointing.
• US yields are higher, favouring the Greenback’s advance.

On Wednesday, the US Dollar found momentum after the report of positive weekly Initial Jobless Claims from the US, which flashed further warning among investors regarding further tightening from the Federal Reserve (Fed).

The labor market in the United States is showing signs of resilience, and despite the evidence of inflation, it might make Fed officials consider further tightening, which seems to be spooking investors. 

Daily Digest Market Movers: US Dollar finds a lift on better-than-expected Initial Jobless Claims

• The US Dollar DXY Index trades neutrally around 103.50.
• Initial Jobless Claims in the US for the week ending November 18 were lower than expected at 209,000, marking the lowest level in five weeks.
• Durable Goods Orders in the US dropped by 5.4%, exceeding the forecasted 3.1% contraction, following a previous month's increase of 4.6%.
• Despite the decline in Durable Goods Orders, the US Dollar strengthened against other currencies, with the DXY index climbing to 104.10, showing a 0.50% rise.
• The Federal Open Market Committee's November Minutes revealed that officials were concerned about inflation and needed to see more evidence to be convinced that inflation is coming down.
• The 2, 5 and 10-year rates increased to 4.96%, 4.46% and 4.43%. Still, markets are confident that the Federal Reserve won’t hike in November and are betting on rate cuts sooner than expected in May 2024. A sizable minority is even betting on a rate cut in March.

Technical Analysis: US Dollar bulls see some light, bears still show dominance

The technical landscape of the DXY daily chart delivers a mix of bullish and bearish signals. The Relative Strength Index (RSI) standing flat near oversold conditions indicates a potential weakening of the selling momentum. This could suggest an imminent reversal, a classic sign that buying pressure could soon resurface. Contrarily, the flat red bars of the Moving Average Convergence Divergence (MACD) hint at a short-term bearish bias, suggesting that sellers might be in control of the immediate market. Yet, it is important to bear in mind that the index’s continuous flat nature could turn either way.

Furthermore, the DXY's position below the 20 and 100-day Simple Moving Averages (SMAs) can be perceived as a bearish signal. However, it currently sits above the 200-day SMA, suggesting that bulls hold the fort on a broader time frame with the underlying trend remaining upward.

Support levels: 103.60 (200-day SMA), 103.30, 103.15.
Resistance levels: 104.00, 104.20 (100-day SMA),104.50.