• The DXY stabilized at 104.15 on Thursday after reaching a daily high of 104.40.
• Weekly Jobless Claims came in higher than expected in the week ended on February 3.
• Markets digest Fed official Barkin’s words.

On Thursday, the US dollar (USD) increased gradually, reaching 103.45 at one point before leveling out at 104.15 due to encouraging initial jobless claims data. But with no new catalysts, bulls appear to be losing speed, and speakers from the Federal Reserve (Fed) are refusing to offer any further direction on the bank’s future course.

Jerome Powell, the chair of the US Federal Reserve, stated that he thought a rate drop in March was “unlikely” and that the bank needs more proof that inflation is declining before it can feel comfortable reducing rates. Speaking on the wires this week, several officials reiterated the Fed’s position that it is still awaiting additional evidence and will not be considering cuts in March.

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Daily digest market movers: US Dollar Jumps and gains some ground on positive Jobless Claims

• The initial estimate of jobless claims for the week ending on February 3 was lower than expected. According to the US Department of Labor, there were 218K claims, a minor decrease from the 227K claims the previous week and less than the 220K claims that were anticipated.

• The CME Fed Watch Tool indicates that there is now a 20% chance of rate reduction in March. For the May meeting, when there is a strong chance of a hold, those odds increase to 50%.

• An increase in US Treasury bonds yields helps maintain the US Dollar. The yields for the next two, five, and ten years are 4.45%, 4.11%, and 4.16%, respectively.

Technical analysis: DXY fails to regain the 100-day SMA, bulls still present

Although it is still in positive territory, the daily Relative Strength Index (RSI) exhibits a flat slope that suggests a slowing in buying momentum over time. Positive territory often indicates a bullish bias, thus it is too soon to expect a negative reversal.

Flat green bars on the Moving Average Convergence Divergence (MACD) show a decrease in bullish momentum without a bearish crossover. The MACD shows that, although it has decreased, purchasing pressure exists.

Regarding the Simple Moving Averages (SMAs), the index trades below the 100-day SMA, indicating some bearish pressure in the intermediate term. Still, it is anchored above the 20-day and 200-day SMAs, indicating a positive tilt in the longer framework. In conclusion, even though the bulls’ momentum is waning, the short-term technical outlook appears to favor them.

Conclusion

The synchronized tango of labor market reports and the US Dollar is as beautiful as it is powerful. As we’ve charted in this detailed exploration, the former can raise the latter to new heights, signaling strength and stability in the US economy. For the discerning investor and the sagacious pundit, understanding the role of labor market figures in shaping currency movements is tantamount to economic wisdom. As the adage goes, the devil is in the details, and when it comes to the financial markets, the details often spend their labor in providing cues that are far from incidental. With the dollar poised and ready for the next step, the labor market figures emerge not as mere statistics, but as the keystones of a thriving economic ballet.