Home Daily Commentaries USD loses strength, falls to the 106.50 range

USD loses strength, falls to the 106.50 range

Daily Currency Update

Demand for the US dollar eased this morning and encountered notable resistance. The US Dollar Index (DXY) fell to 106.5. Given the current price movement, there appeared to be a possibility of further gains in the dollar in the near term. Once the index surpassed the 2023 high of 107.34 on October 3, it stimulated bullish momentum, and could potentially challenge the weekly peak at 107.99 observed on November 21, 2022. If the DXY stays above the critical 200-day Simple Moving Average (SMA), currently at 103.14, the overall outlook for the index is anticipated to remain positive.

Key Movers

This morning EUR/USD pair traded within a narrow range just above the 1.0500 mark on Thursday, as market participants maintained a cautious outlook ahead of employment-related signals from the United States (US). Earlier in the week, hawkish remarks from US Federal Reserve officials dampened sentiment by suggesting the possibility of a rate hike in the November meeting due to persistent high inflation.

Government bond yields have surged to levels not seen since 2007, reflecting concerns among speculative traders. The yield on the 10-year Treasury note has notably risen. This has bolstered the US dollar's position in response to market apprehensions, although extreme overbought conditions led to a corrective decline on Wednesday. Nevertheless, the USD continues to trade near recent multi-month highs against most major currencies, showing no indication of a shift in its trajectory.

In terms of data, Germany released its August Trade Balance, which revealed a surplus of €16.6 billion, surpassing expectations of €15 billion. However, the report showed a 1.2% drop in exports and a 0.4% decrease in imports for the month. Meanwhile, the US released its Goods and Services Trade Balance, indicating a deficit of $58.3 billion, which was better than anticipated. Additionally, the US published Initial Jobless Claims for the week ending September 29, with a figure of 207K, and reported September Challenger Job Cuts, revealing that US-based employers announced 47,457 job cuts during the month, marking a 37% decrease from the 75,151 cuts announced in August but a 58% increase from the 29,989 cuts announced in September 2022. During Thursday's Asian trading hours, GBP/USD saw an ascent above 1.2150 but subsequently struggled to maintain its momentum. Nevertheless, the pair was able to find stability above the 1.2100 level during the European session.

Expected Ranges

  • EUR/USD: 1.0492 - 1.0529 ▼
  • GBP/USD: 1.211 - 1.2163 ▼
  • AUD/USD: 0.608 - 0.6377 ▼
  • USD/CAD: 1.3712 - 1.3782 ▼