US Dollar Softens Ahead of NFP Report

The US Dollar weakened on Thursday, despite persistent inflationary pressures and lower-than-expected jobless claims. The Personal Consumption Expenditure (PCE) Price Index, a key inflation gauge, rose 2.1% year-over-year in September, while core PCE remained steady at 2.7%. Additionally, initial jobless claims declined to 216,000, defying market expectations of an increase.

Market Focus on NFPs

The upcoming Nonfarm Payrolls (NFP) report on Friday is a major market event. Economists anticipate a significant slowdown in job growth, with an estimated 113,000 new jobs added in October. Any surprises in the NFP data could significantly impact the US Dollar and the Federal Reserve’s monetary policy outlook.

DXY Technical Outlook

The US Dollar Index (DXY) is currently consolidating around the 104.50 support level. While technical indicators suggest a potential downward trend, the index may find support at the 200-day Simple Moving Average (SMA) near 103.50.

Key Levels:

Support: 104.50, 104.30, 104.00
Resistance: 104.70, 104.90, 105.00

In essence, the US dollar’s recent weakness is primarily driven by profit-taking and market anticipation of a potential rate cut by the Federal Reserve. The upcoming NFP report will be crucial in determining the short-term direction of the dollar.