US Dollar weakens on higher-than-expected Jobless Claims

• The US Dollar index plunged below its 20-day SMA, trading below 106.00.
• Soft labor market data seems to be pushing the buck lower.
• If economic data continue coming in soft, markets might continue to bet on a more dovish Fed.

The US Dollar (USD) is under significant selling pressure on Thursday as markets gear up for the release of November's United States (US) Nonfarm Payrolls (NFP) data on Friday. The Greenback’s decline has been driven by weaker-than-expected labor market signals, including a sharp rise in Initial Jobless Claims and an increase in layoffs reported by the November Challenger Job Cuts data. 

Friday’s NFPs from November will set the pace of the USD’s price dynamics for the next sessions.

Daily digest market movers: Buck continues weak ahead of Friday’s NFP

• The Challenger Job Cuts report for November revealed 57,727 layoffs, higher than October's 55,597, signaling a concerning uptick in job cuts.
• Weekly Initial Jobless Claims for the week ending November 29 surged to 224,000, exceeding expectations of 215,000 and up from the previous week's 215,000.
• The CME FedWatch Tool now suggests a 70% probability of a 25 basis points (bps) rate cut at the Federal Reserve's (Fed) December 18 meeting.
• As the Fed has stated that it remains data-dependant, if NFPs on Friday show weak results, it might start to fully price in a cut in December’s meeting. 

DXY technical outlook: Short-term weakness intensifies, 20-day SMA gone

The US Dollar Index (DXY) broke below its 20-day Simple Moving Average (SMA), marking a critical technical setback that has weakened its short-term outlook. Indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are nearing negative territory, underscoring the growing bearish momentum.

Key support levels now lie at 105.50 and 105.00, while resistance may emerge at 106.50 and 107.00. With the DXY losing steam, market participants will closely watch Friday's NFP data for any signs of reversal or further deterioration.