The US dollar index (DXY) turned lower after another devasting dose of data from the Labour Department. The index is lower by 0.10% today as the constituent currencies rise. The EURUSD pair is up by 25 basis points while the GBPUSD is down by about 5 basis points.
US jobless claims rise
The biggest news was the US jobless claims data. The data showed that the initial jobless claims increased by another 2.44 million in the previous week. This brings the total number of claims during the coronavirus pandemic to more than 38.6 million. Still, the number has been declining in the past seven weeks.
Analysts polled by Bloomberg were expecting the claims to be at 2.4 million. The number of claims reported last week was increased to 2.68 million.
Continuing jobless claims rose to 25.07 million, which was worse than the expected 24.76 million.
US dollar index reacts to weak manufacturing data
The US dollar index (DXY) also reacted to the disappointing manufacturing data released by the Philadelphia Federal Reserve. The data showed that the manufacturing index declined to -43.1 from the previous -56.6. This was worse than the expected decline of -41.5.
These numbers show that the US economy is ailing while other economies are improving. Earlier today, we reported that manufacturing and services PMI data from Europe showed some improvements.
The US dollar index will next react to the flash manufacturing PMI data from Markit and a statement by Fed Chair, Jerome Powell.
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DXY technical outlook
The DXY is now trading at 99.15, which is lower than May’s high of 100.88. On the daily chart, the price is inches above the 50% Fibonacci retracement level. The price is along the 100-day exponential moving average and slightly below the 50-day EMA. At the same time, the volatility, as measured by the Average True Range (ATR) has declined to the lowest level since March 11. Therefore, a move below the %0% Fib level will signal that bears have prevailed. This will see the index continue dropping as they attempt to move below 98.
On the flip side, a move above 100, will signal that there are more buyers in the market. This price is slightly above the 61.8% retracement level. It is also an important psychological level.