The US Dollar (USD) is fading under profit-taking pressure on Thursday after the Greenback had its best performance in years in reaction to Donald Trump winning the US presidential election. Traders’ attention shifts now to the Federal Reserve (Fed), which is set to cut interest by 25 basis points (bps) this Thursday. With the rate decision fully priced in, the focus will be on Fed , specifically on the inflation and rate for December and beyond in light of the US presidential election outcome. The is picking up in weight, with the weekly Jobless Claims set to be released. The quarterly Nonfarm Productivity and Unit Labor Costs will add some weight to the price reaction as well. Right at the end of the trading day, the Fed will release its rate decision, followed by Fed Chairman Powell’s press conference shortly thereafter.
Daily digest market movers: Normal programming until January
- The Initial Jobless Claims for the week ending on November 1 are expected to come in at 221,000, higher than the 216,000 of the previous week.
- The preliminary reading for the third quarter Nonfarm Productivity is expected to come in at 2.3% compared to 2.5% in the previous quarter.
- The preliminary third quarter Unit Labor Cost is expected to tick up to 0.5%, from 0.4% previously.
US Dollar Index Technical Analysis: It is still a long way until inauguration (DXY) has played its hand and has made markets clear what the famous Trump trade will mean for markets when US President-elect Donald Trump takes office on January 20, 2025. While the Fed is set to continue its interest rate-cut cycle, a tug-of-war might occur. Traders could expect the second phase of the Trump trade in January with a stronger Greenback, while the rate-cutting cycle suggests a softer Greenback. Refrain from expecting this to be a straight line-up for the DXY and rather expect to see substantial easing first before Trump takes office. The first upper level is 105.53 (April 11 high), a very firm cap resistance, with 105.89 (May 2 high) just above. Once that is broken, 106.52, the high of April and a double top, will be the last level standing before starting to talk about 107.00.On the downside, last week’s peak at 104.63 looks to be the first pivotal support nearby. Should the fade become bigger, the round level of 104.00 and the 200-day Simple Moving Average (SMA) at 103.85 should refrain from sending the DXY any lower. (Click on image to enlarge)US Dollar Index: Daily ChartMore By This Author:
