US Dollar sees mild gains following jobless claims, less hawkish Powell

• Fed Chair Powell signals inflation still remains high despite significant easing, suggesting an uncertain path forward.
• Powell acknowledges that strict monetary policy has balanced both inflation and an overheated economy, leveling dual goal risks.
• Weekly Initial Jobless Claims came in steady.

The US Dollar Index (DXY) is trading mildly higher at 105.80. The Greenback's modest upward momentum comes despite Federal Reserve (Fed) Chair Jerome Powell's cautious remarks on inflation and its uncertain future trajectory. Ahead of Nonfarm Payrolls on Friday, weekly Jobless Claims figures seem to be benefiting the USD.

The US economy has seen substantial progress, according to the Fed, yet inflation remains worryingly high and its path uncertain. Although the Fed's restrictive measures have limited inflation and overheating, progress on inflation has slowed. Nonfarm Payrolls figures on Friday will provide additional guidance for markets on the state of the economy.

Daily digest market movers: DXY backed by stable job market and lowering rate cut odds

• Weekly Initial Jobless Claims came in at 208K, while no changes were reported in Continuing Claims, which continued to hold at 1.774 million, similar to the previous week.
• Fed rate cut expectations have slightly shifted, with July odds increasing to 33% and the September and November odds up to 70% and 95%.
• US Treasury bond yields are mixed. The 2-year yield is moving lower at 4.93%, while the 5-year and 10-year yields are slightly lower at 4.64% and 4.63%, respectively. 
• For Friday, markets expect a deceleration in April’s Nonfarm Payrolls, while the Average Hourly Earnings are forecasted to see a slight acceleration. The Unemployment Rate is seen coming in unchanged at 3.8%.

DXY technical analysis: DXY bulls continue to struggle, outlook still positive

The DXY's technical outlook reflects a buying momentum, primarily driven by its position in relation to its Simple Moving Averages (SMAs). Even though the pair has a short-term negative outlook from the bearish tug of war with the bulls, it continues to trade above the 20,100 and 200-day Simple Moving Averages, which suggests a growing strength among the bulls.

The Moving Average Convergence Divergence (MACD) shown by the rising red bars suggests that the bears are advancing. At the same time, the Relative Strength Index (RSI) is in a flat position within positive territory. This indicates that the buying force is weakening while bears push downwards.