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US Dollar sees further downside ahead of NFPs

by FX BrokerNews
  • The US Department of Labor released Initial Jobless Claims, and the figures were marginally higher than anticipated.
  • Additionally, Q4 Unit Labor Costs revealed a weaker performance.
  • Investors are now awaiting the release of Nonfarm Payrolls figures for February on Friday.

The US Dollar Index (DXY) experienced a decline to the 103.1 level on Thursday, marking a nearly 0.60% weekly decrease. This downturn is attributed to the increase in Initial Jobless Claims for the week ending March 2 and the Q4 Unit Labor Costs falling below expectations. The forthcoming release of February’s data on the Unemployment Rate, Average Hourly Earnings, and Nonfarm Payrolls on Friday is anticipated to dictate the short-term trajectory of the DXY.

Should additional labor market data from the US be reported on Friday, the possibility of imminent rate cuts may exert additional pressure on the Greenback.

Daily digest market movers: DXY sees drop in soft labor market figures

  • The ADP jobs report hints at a lower-than-expected number of jobs, but the JOLTS data suggests a tight labor market.
  • Initial Jobless Claims for the week ending on March 2 slightly exceeded the consensus, reaching 217,000.
  • In Q4, Unit Labor Costs in the US were lower than anticipated, rising by 0.4% compared to the estimated 0.6%.
  • US Treasury bond yields continue their descent, with the 2-year yield falling to 4.54%.
  • Market sentiments still indicate expectations for the Federal Reserve (Fed) to initiate easing in June.
  • However, the shaping of these expectations will depend on the data released on Friday.

DXY technical analysis: DXY bears advance as buyers are nowhere to be found

The technical indicators of the DXY depict a predominantly bearish scenario. The Relative Strength Index (RSI) exhibits a downward slope and resides in negative territory, suggesting a diminishing buying momentum. Simultaneously, the Moving Average Convergence Divergence (MACD) reveals red bars, indicating a shift in control towards sellers in determining the DXY’s direction.

Regarding price action, the currency index is positioned below its 20, 100, and 200-day Simple Moving Averages (SMAs), indicating a comprehensive bearish perspective. This positioning typically signifies an overarching selling trend.

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