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The US dollar stumbled on Thursday, giving up Wednesday’s gains and falling below 107.00 on the US Dollar Index (DXY). Hopes of a potential trade agreement with China, however, provided a glimmer of optimism for markets worried about tariffs. The DXY, measuring the dollar against six major currencies, currently sits below 106.90.
A quiet US economic calendar, featuring only weekly jobless claims, the Philadelphia Fed Manufacturing Survey, and a series of Fed speeches, failed to distract markets from trade-related news.
Jobless claims data disappointed, with initial claims for the week ending February 14th exceeding forecasts at 219,000 versus the expected 215,000. Continuing claims also increased. On a brighter note, the Philadelphia Fed Manufacturing Survey for February beat expectations.
A flurry of Federal Reserve speakers were scheduled throughout the day.
Global stock markets were mostly in the red, although European indices managed some gains.
The CME FedWatch tool now suggests a slightly increased chance of interest rates remaining steady in June. The 10-year US Treasury yield eased to around 4.51%, down from Wednesday’s peak.
Technically, the US Dollar Index has fully retraced Wednesday’s advance. A firm rejection at 107.35 has sent the DXY into retreat. Further positive news on trade with China could see the 106.60 level tested. Former support at 107.35 now acts as resistance, with the 55-day SMA providing further resistance. Key support levels lie at 106.56, 106.52, and 105.89. The RSI indicates potential for further losses, with the 200-day SMA at 104.97 a possible target if a significant catalyst materializes.
