US Dollar extends gains, favored by rising yields

• The DXY index slightly rose to 105.70.
• Jobless Claims from the first week of November 3 came in lower than expected.
• Fed’s Barkin delivered hawkish comments during the session. Still, bets on a hike in December are low.

The US Dollar (USD) is seeing gains against its rivals on Thursday, with the DXY Index ascending to 105.70. The Greenback price dynamics were set by strong Jobless Claims data and rising US bond yields, which seem to be limiting the downside for the USD. All eyes are now on Inflation next week, which could set the direction of the US Dollar in the short term.

Markets remain quiet this week as investors await fresh catalysts to place their bets on the next Federal Reserve (Fed) decision in December. Several officials were on the wires on Monday and Tuesday but didn’t provide any highlights. The focus seems to have turned to next week’s October inflation figures from the US. On Wednesday, Thomas Barkin commented that he wasn’t satisfied with the current inflation outlook, commenting that the job isn’t done.

Daily Digest Market Movers: US Dollar struggles to gain momentum despite Fed hawk’s rhetoric 

• The US Dollar Index stands with mild gains at 105.70, with the bulls struggling to make a significant move.
• No high-tier reports will be released this week. Markets await next week’s inflation figures from the US and are still digesting last Friday’s US Nonfarm Payrolls report.
• The Initial Jobless Claims from the week ending November 3 came in at 217,000, lower than the expected 218,000 and fell in relation to its last reading of 220,000.
• As a reaction, the 2-year Treasury rate rose to 4.96%, while the longer-term 5 and 10-year rates increased to 4.55%, which seems to be limiting downside for the USD.
• Investors continue to be on the sidelines, awaiting high-tier reports to continue placing their bets on the next Fed decision.
• According to the CME FedWatch Tool, the odds of a 25-basis-point hike in December are extremely low, below 10%. 

Technical Analysis: US Dollar Index momentum flatens, bears gather for downside

According to the daily chart, the technical outlook for the DXY Index remains neutral to bearish as the bulls are struggling to gather momentum with bears being around the corner. With a flat slope below its midline, the Relative Strength Index (RSI) suggests a period of stability in negative territory, while the Moving Average Convergence (MACD) displays stagnant red bars.

What gives the outlook neutrality is the index staying below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, indicating that the bulls still have the upper hand in the broader picture. As long as the bear manage to hold the index below this level, the index will remain vulnerable for further downside.

Support levels: 105.50,105.30,105.00.
Resistance levels: 105.80, 106.00, 106.10 (20-day SMA).