- DXY is softly lower on Thursday after US data comes in mixed.
- Losses remain limited as Greenback keeps downside contained.
- Investors pivot to Friday’s key US inflation print.
The US Dollar Index (DXY) showed the Greenback giving a mixed performance on Thursday, testing into the low side after a mixed bag of US data figures but finding enough footing to limit losses. The US Dollar is mixed across the major currencies board, down a thin quarter of a percent against the Euro (EUR) and up a scant sixth of a percent against the Swiss Franc (CHF).
US Initial Jobless Claims for the week ended June 21 were better than expected, with 233K new jobless benefits seekers compared to the forecasted 236K, and slightly down from the previous week’s 238K. The four-week average for Initial Jobless Claims increased to 236K, but this still remains below the running average.
The US Gross Domestic Product (GDP) met expectations on Thursday, with a slight revision to 1.4% from the initial reading of 1.3%. Additionally, Core Personal Consumption Expenditures for the first quarter rose slightly to 3.7% quarter-on-quarter, versus the forecasted 3.6%. Following Thursday's market close, the upcoming Presidential debate will attract attention as investors anticipate possible policy hints from the candidates.
On Friday, the US PCE Price Index inflation print will be the week's focal data point, as investors hope for continued cooling in US inflation numbers to potentially influence the Federal Reserve's (Fed) decisions on rate cuts. Currently, core PCE Price Index inflation is forecasted to decrease to 0.1% month-on-month in May from 0.2%.
DXY technical outlook
Thursday’s limited downside leaves the Dollar Index still holding onto a near-term bullish stance, with the DXY trading on the north side of the 200-hour Exponential Moving Average (EMA) at 105.58. The DXY hit a two-month peak this week, clipping above 106.10 as the Greenback basket follows a rough channel higher.
DXY hourly chart
DXY daily chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: No respite to the selling pressure
AUD/USD remained well on the defensive, trading in a volatile fashion that saw spot surpass the 0.6100 hurdle just to fade that uptick afterwards and revisit the 0.5980 towards the end of the NA session.
EUR/USD: Tariffs keep the sentiment subdued
EUR/USD added to Friday’s pullback and revisited the sub-1.0900 area, or two-day lows on the back of further gains in the US Dollar and the widespread demand for the safe-haven universe.
Gold recedes to four-week lows near $2,950
The persistent selling pressure is now dragging Gold prices to the area of fresh multi-week troughs near the $2,950 mark per troy ounce, always amid the continuation of the recovery in the US Dollar, highr US yields across the curve and unabated tariff tensions.
Binance founder CZ becomes strategic advisor to Pakistan's Crypto Council
The Pakistan Crypto Council appointed Binance founder and former CEO Changpeng Zhao (CZ) as a strategic advisor on Monday to provide guidance on crypto infrastructure, education and adoption for the Pakistani government and private companies.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.