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The U.S. dollar index rebounded amid weak employment data and expectations of a Fed rate cut
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: The U.S. dollar index rebounded amid weak employment data and expectations of an interest rate cut by the Federal Reserve." Hope this helps you! The original content is as follows:
During the European trading session on Friday (November 7), the U.S. dollar index (DXY) rose slightly to 99.87, recovering modestly after the recent decline. However, dollar sentiment remains fragile as traders are unable to digest lower-than-expected U.S. employment data, rising expectations for a Federal Reserve interest rate cut in December, and the impact of a long-term U.S. government shutdown. These factors continue to weaken economic confidence.
The U.S. government shutdown continues, setting a record for the longest time in history, which still puts heavy pressure on dollar sentiment. The U.S. government shutdown shows no sign of ending. But senators are expected to meet over the weekend, so keep an eye out for any new news Monday morning. *The market shows that the probability of the government shutdown continuing beyond November 16 is 46%.
ING analysts believe that the U.S. dollar index has encountered resistance at the top of its three-month trading range and is expected to fall back. But it's unclear where today's push to the downside will xmserving.come from. One final note of note: Tensions in U.S. currency markets last week may have contributed to the dollar's strength. Money market conditions appear to have improved this week, with borrowing at the Fed's overnight Standing Repo Facility falling to zero, xmserving.compared with $50 billion at the same time last week. The U.S. dollar index may have hit a high near 100.35 on Wednesday. If this is the case, subsequent gains may be blocked in the 99.90-100.00 range.
Overseas Chinese Bank (OCBC) analysts believe that given that the Federal Reserve continues to implement interest rate cuts and various U.S. economic data are also weak, the dollar is expected to continue to remain weak. As long as the overall market risk appetite does not change, and the USIf economic growth outside China remains stable, there is still room for the dollar to continue to fall.
Signs of further deterioration in the U.S. labor market
Weak labor data reinforced expectations that the Federal Reserve will soon cut interest rates, while the longest government shutdown in history is still eroding investor confidence and dragging down the outlook for the dollar.
Two private employment reports in the United States heightened concerns about the labor market, offsetting the mild optimism brought by Wednesday's ADP employment data.
Data released by the Revelio Public Bureau of Labor Statistics show that net employment decreased by 9,100 people in October, including a decrease of 22,000 public sector positions.
Challenger, Gray & Christmas, a layoff consulting firm, said that as xmserving.companies cut costs and adopt artificial intelligence technology, the number of layoffs increased to 153,074 in October, the highest level in 22 years.
As the U.S. government shutdown enters its fifth week, the release of the key non-farm payrolls report will be delayed for the second consecutive month. Therefore, today's market focus will be on the speeches of many Federal Reserve officials, as well as the preliminary value of the University of Michigan's consumer confidence index - which is expected to decline slightly in November.
Federal Reserve officials signaled divergence in the outlook for inflation
St. Louis Fed President Alberto Musalem said that inflation still faces moderate upward pressure due to the impact of tariffs, but he expects the impact to subside next year. While there are pockets of resilience in the economy, a slowing labor market and political gridlock are reinforcing expectations that the Federal Reserve will take a more cautious stance.
Trade easing is hard to overcome as support
The U.S. government plans to suspend some tariffs on China’s shipbuilding industry, slightly easing trade tensions. However, as employment growth slows and fiscal uncertainty continues, the dollar's short-term recovery remains fragile.
The United States focuses on the consumer confidence index and speeches by Federal Reserve officials
Today the United States will release the preliminary value of the University of Michigan consumer confidence index for November. The market expects that the index will still maintain a healthy level of 53. The bubbly trend of the Nasdaq index will continue to be the focus of the market. Yesterday's sharp decline in the index dragged down the Japanese yen cross. So far, Nasdaq December futures are signaling a slightly higher opening today.
In addition, two dovish Fed officials, John Williams and Philip Jefferson, will give speeches. However, in the short term, hard data, rather than speeches by Fed officials, seems to be the more important factor affecting the trend of the dollar.
Technical Analysis
The U.S. Dollar Index is currently trading around 99.87, supported by the lower rail of the ascending channel and the 38.2% Fibonacci retracement level of 99.67. After rising sharply in October, the pair has recently retreated from 100.35.Showing a short-term consolidation trend.
The 20-day exponential moving average (20-EMA) remains above the 50-day exponential moving average (50-EMA), maintaining a mildly bullish structure. The relative strength index (RSI) sits near 47, indicating neutral momentum after pulling back from overbought levels. If it can continue to close above 99.94, it may restart the upward trend, targeting the 100.35-100.64 range; if it falls below 99.46, it may further pull back to 99.25 or even 98.99.
The above content is all about "[XM Foreign Exchange Market Analysis]: The U.S. dollar index rebounded amid weak employment data and expectations of a Federal Reserve interest rate cut". It was carefully xmserving.compiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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