01 February, 2024 Ruchit Thakur

Dollar Index Analysis

Evening Update: Will the Dollar Index (DXY) continue to rise or decline following Jobless claims data ?

The Dollar Index (DXY) was trading around a strong support level between 100.50 and 100.80 last month, and it recovered well from there. This region provided significant support for the Dollar Index, which the price cautiously followed before erupting far past it. Previously, between February and May, the 100.50-100.80 zone offered consistent support. DXY recovered strongly after that, trading in the 106.50-107.00 region.

The US Dollar Index (DXY) has been under some selling pressure, departing the weekly highs near 103.80. We will discuss all of this using a chart and multiple time frames. Please have a look:

DXY has a solid support range of 100.50 to 100.80.
Based on the current trend, the DXY could rally into the 105.50-107 region.
The chart indicates a potential triple bottom between 100.50 and 100.80, and the DXY has been rising upward since testing this critical support.

Please refer to the important support zone shown in the chart above. The Dollar Index advanced as bulls successfully held the 100.50-100.80 mark. As we observed in 2023, the Dollar Index appears to be trading mostly horizontally in a broad range of 100.50 to 105.50. If the Dollar Index can reclaim the 103.00-103.50 level, it may show signs of strength in the early months of 2024. DXY could soon trade in the 105.50-107 area.

Earlier CPI data bolstered dollar bulls, followed by unemployment claims data, and the index climbed from 102.20 to 103.50. Initial Jobless Claims refers to the number of people who applied for unemployment insurance for the first time in the preceding week. This is the latest US economic data, yet market reactions differ from week to week.

A reading over forecast is generally negative (bearish) for the USD, whereas a reading below expectation is generally supportive (bullish).

Please have a look at the chart and comprehend its relevance. The Dollar Index (DXY) is facing heavy short-term supply around 103.50-103.80, followed by the 200 DMA on the daily chart. Since last month, there has been a consistent supply in the aforementioned location.

Last week, initial jobless claims surged more than expected. Initial jobless claims increased by 224K from a week ago. Continuing Jobless Claims also exceeded expectations.

The number of US citizens who claimed unemployment insurance benefits grew by 224K in the week ending January 27, according to the US Department of Labor on Thursday. Once again, the number exceeded market expectations and followed a 215K gain the previous week.

Combining charts and data, we can infer that DXY is bullish and moving towards 105.50-107.00 zone. It may pull back to 102.00 zone in the medium term, but each down move provides an opportunity for bulls to push price towards 105.50-107.00 zone correspondingly.

Please examine the support and resistance levels on the Dollar Index (DXY) weekly chart. Each level is represented by a spot chart.

Dollar Index	Support	Resistance
Level 1	100.50	105.50
Level 2	99.50	107.00

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Dollar Index Analysis

Dollar Index Analysis

Please have a look at the chart and comprehend its relevance. The Dollar Index (DXY) is facing heavy short-term supply around 103.50-103.80, followed by the 200 DMA on the daily chart. Since last month, there has been a consistent supply in the aforementioned location.

Last week, initial jobless claims surged more than expected. Initial jobless claims increased by 224K from a week ago. Continuing Jobless Claims also exceeded expectations.

The number of US citizens who claimed unemployment insurance benefits grew by 224K in the week ending January 27, according to the US Department of Labor on Thursday. Once again, the number exceeded market expectations and followed a 215K gain the previous week.

Combining charts and data, we can infer that DXY is bullish and moving towards 105.50-107.00 zone. It may pull back to 102.00 zone in the medium term, but each down move provides an opportunity for bulls to push price towards 105.50-107.00 zone correspondingly.