USD Slid Amid Further Profit Taking

The Dollar Index’s pullback continued on Thursday, with the index falling back to the 95.50s ahead of the start of the Asia Pacific trading session.

Further positive US data, such as the drop of weekly initial jobless claims to a new post-pandemic low at 269K and larger than expected jump in the November Philly Fed Manufacturing Index, failed to push the US dollar up.

Traders say profit-taking is the main driver of the pullback. While the Dollar Index is set to end Thursday’s session 0.3% lower, it still trades more than 1.5% above its levels prior to the release of the much hotter than expected US inflation report last week.

Further weakness in Treasury bond yields also didn’t help, with the 10-year dropping under 1.59%. The dollar is expected to consolidate as it waits for additional fundamental catalysts.