US Dollar sinks back below 104 with US markets closed for Thanksgiving

• The Greenback is unable to hold on to gains ahead of this week’s close. 
• US Traders are absent this Thursday as Thanksgiving and Black Friday will keep US trading desks closed.
• The US Dollar Index breaks below 104 again and is facing a loss for this Thursday and for this week’s performance overall. 

The US Dollar (USD) is not on US trader’s minds for once as they are off this Thursday enjoying Thanksgiving. Although the Greenback held good cards on Wednesday to erase this week's losses, it saw a near complete reversal in the last trading hour before going into the US bank holiday. With no US trading, Asian and European markets are sending the US Dollar Index (DXY) lower and a weekly loss looks nearly inevitable. 

Today sees a very light calendar with no US data to be published. From the European front the Purchase Managers Index (PMI) numbers were already issued ahead of the US PMI numbers for Friday. Although the European numbers are still in contraction, below 50, they are soaring against the previous from October. Should Friday’s US PMI numbers decline, the shift in dynamics between European and US PMI’s could see the Greenback declining further.  

Daily digest: Thanksgiving quietness

• European purchasing manager indices numbers are showing an uptick from earlier lower levels in October, with an uptick in November in the preliminary readings. 
• The ceasefire deal in Gaza has been delayed by a day, and should take place on Friday.
• A car explosion on the border between Canada and the US was deemed an accident with no terrorist motive at hand.
• The Chinese support and funding issued on Wednesday, made the Chinese property sector jump nearly 7%.
• ECB member Joachim Nagel said in early morning comments that the European Central Bank (ECB) is unsure if it has actually reached its peak rates. Rates must stay higher for longer as inflation might resurge quickly in the coming months. 
• Equities are mildly in the green on this US holiday. The Chinese Hang Seng is worth mentioning, up 1% near its closing bell. European equities are looking for direction while US equity futures are marginally higher in their half-day-trading regime due to the US holiday.
• The CME Group’s FedWatch Tool shows that markets are pricing in a 97.8% chance that the Federal Reserve will keep interest rates unchanged at its meeting in December. A juicy sidenote is that now 2.2% even thinks a hike might be at hand. 
• The benchmark 10-year US Treasury Note yield halted trading at 4.40% and will not move this Thursday with markets closed. 

US Dollar Index technical analysis: Imbalance and no counterweight

The US Dollar is trading weaker and has erased all its gains from Wednesday. The losses are  big enough to tip the US Dollar Index (DXY) into the red this week. With this Thursday’s uptick in European PMI numbers and the US trading desks closed, a window of opportunity could open for another substantial weakening of the US Dollar this Thursday. 

The DXY is right at the 200-day SMA near 103.62, and will need to have a daily close above it in order to reassure that the same 200-day SMA is valid as support. Look for a further recovery bounce towards the 100-day SMA near 104.20 with preferably a break and close above. Should the DXY be able to close and open above it later this week, look for a return to the 55-day SMA near 105.71 with 105.12 ahead of it as resistance into next week. 

The 200-day SMA will try to play its role again as a crucial pivotal supportive level against any downturn. Should the index snap this level again, the psychological 100.00 level comes into play. With a very slim economic calendar and US trading desks closed, there is room for a potential big downturn.