US Dollar clings onto recent gains despite soft opening in Asia

• The US Dollar trades overall in the red against most major peers. 
• A massive data dump is expected at 12:30 GMT with US GDP, Durable Goods, and weekly Jobless Claims. 
• The US Dollar index hovers around 106.00, clinging onto Wednesday’s gains.

The US Dollar (USD) trades a touch softer on Thursday following Wednesday’s significant increase and as the Japanese Yen (JPY) seems to be recovering slightly from the recent losses. Japanese Finance Minister Shunichi Suzuki said that the government is watching closely the forex market and is standing ready to act when needed, prompting the Yen to rise from its fresh multi-decade low and gaining intraday against the US Dollar. The question is how long the impact of these words will last as the recovery is starting to lose momentum already in the European trading session. 

On the US economic calendar front, all important data points will be released at 14:30 GMT:  the US Gross Domestic Product final reading for Q1, US Durable Goods and weekly Jobless Claims. Expect thus to see a surge in volatility, particularly if the data does not support a stronger Greenback. 

Daily digest market movers: Data-driven Thursday

• At 12:30 GMT, nearly all important data points will be released:
  • US Gross Domestic Product for the third quarter:
    • Headline GDP is expected to grow at an annualized rate of 1.4%, more than the 1.3% previously estimated.
    • GDP Price Index should remain stable at 3.1%.
    • The Headline Personal Consumption Expenditure  Price index is seen unchanged at 3.3%, while the core reading is also seen stable at 3.6%.
  • US Durable Goods for May:
    • Headline Durable Goods orders are expected to fall by a marginal 0.1%, swinging from a 0.6% rise a month earlier. to -0.1%.
    • Durable Goods without Cars and Transportation are expected to grow by 0.2%, slower than the 0.4% increase in April.
  • Weekly Jobless Claims for the week ending June 14th:
    • Initial Jobless Claims are expected to decline slightly to 236,000 from 238,000.
    • Continuing Claims are seen heading to 1,820,000 from 1,828,000.
  • Pending Home Sales for May, due at 14:00 GMT, should jump out of contraction, from -7.7% to 2.5%.
• At 15:00 GMT, the Kansas Fed Manufacturing Activity Index for June will be released. The previous print was at -1. 
• Equities are struggling yet again. In Asia, all major indices are set to close in deep red numbers, while US futures are down by less than 0.50%. European equities are trading broadly flat. 
• The CME Fedwatch Tool is broadly backing a rate cut in September despite recent comments from Fed officials. The odds now stand at 56.3% for a 25-basis-point cut. A rate pause stands at a 37.7% chance, while a 50-basis-point rate cut has a slim 6.0% possibility.
• The US 10-year benchmark rate trades near the weekly high at 4.33%.

US Dollar Index Technical Analysis: Wait for dust to settle

The US Dollar Index (DXY) has been strolling through markets with a big thanks to some outside effects. Although for now the near support level at 105.89 looks to be holding, expect with the mixture of data this Thursday and Friday to cause some whipsaw moves. Rather look for the dust to settle late Friday to see where the US Dollar will be heading once a clear picture has been revealed. 

On the upside, the biggest challenge remains 106.52, the year-to-date high from April 16. A rally to 107.35, a level not seen since October 2023, would need to be driven by a surprise uptick in US inflation or a further hawkish shift from the Fed. 

On the downside, 105.53 is the first support ahead of a trifecta of Simple Moving Averages (SMA). First is the 55-day SMA at 105.27, safeguarding the 105.00 round figure. A touch lower, near 104.70 and 104.46, both the 100-day and the 200-day SMA form a double layer of protection to support any declines. Should this area be broken, look for 104.00 to salvage the situation. 

US Dollar Index: Daily Chart