- The United States Dollar (USD), determined by the United States Dollar Index (DXY), is edging higher, currently trading near 104.00 while posing a threat to the 20-day SMA at 104.05. This movement has been largely credited to releasing a better-than-expected Institute for Supply Management (ISM) Services PMI for November.
- Investors are focusing on key employment figures due for release this Friday– particularly the November Unemployment Rate and Nonfarm Payrolls data– as they could suggest further directional moves for the greenback.
- Despite cooling inflation in the United States economy and mixed labor market and economic activity signals, the Federal Reserve (Fed) continues to refrain from ruling out further policy tightening. This somewhat hawkish stance coincides with the release of crucial labor data this week, which could significantly shift market expectations.
Daily Market Movers: United States Dollar gains momentum with boost from strong ISM Services PMI
- United States Dollar trades with a strong note on Tuesday, threatening the 20-day SMA near the 104.00 mark.
- The Institute for Supply Management’s November report revealed the ISM Services PMI surpassed consensus and previous figures by coming in at 52.7, further propelling the United States Dollar’s advance.
- The latest report from United States Bureau of Labor Statistics suggested that October JOLTs Job Openings fell by almost 600K to 8.733 million. This figure was well below the consensus of 9.35 million.
- Looking ahead, crucial upcoming economic releases include the Unemployment Rate, Nonfarm Payrolls, and Average Hourly Earnings on Friday. These figures will hold significant implications for investors and the United States Dollar’s trajectory as they could shape the next Fed decisions.
- Current market expectations from the CME FedWatch Tool show that no rate hike is priced in for the December meeting and that markets are now pricing in rate cuts for mid-2024.
Technical Analysis: United States Dollar bullish momentum strengthens, buyers threaten the 20-day SMA
The indicators on the daily chart clearly portray a strengthening of bullish momentum for the United States Dollar. In positive territory, the Relative Strength Index (RSI) shows an upward slope, while the Moving Average Convergence Divergence (MACD) is printing increasing green bars, providing confirmation of prevailing bullish strength.
Assessing the longer-term outlook, the index is currently positioned below the 20 and 100-day Simple Moving Averages (SMAs) but above the 200-day SMA. This indicates that overall, while experiencing some pressure in the short-term, bulls consistently show their presence in the broader picture. That picture points to a solid upward trajectory. In the event that buyers advance and surpass the 20-day SMA, further gains could be seen in the short-term.
