Continued Surge: US Dollar Gains Ground as DXY Nears 20-Day SMA

• The US Dollar (USD), gauged by the US Dollar Index (DXY), is edging higher, currently trading near 104.00 while posing a threat to the 20-day SMA at 104.05. This movement has been largely attributed to releasing a better-than-expected Institute for Supply Management (ISM) Services PMI for November.
• Meanwhile, investors are focusing on key employment figures due for release this Friday – specifically the November Unemployment Rate and Nonfarm Payrolls data – as they could suggest further directional moves for the greenback.
• Despite cooling inflation in the US economy and mixed labor market and economic activity signals, the Federal Reserve (Fed) continues to refrain from ruling out further policy tightening. This somewhat hawkish stance coincides with the release of key labor data this week, which could dramatically shift market expectations.

 
Daily Market Movers: US Dollar gains momentum with boost from strong ISM Services PMI

• US Dollar trades with a strong note on Tuesday, threatening the 20-day SMA near the 104.00 mark.
• The Institute for Supply Management’s November report revealed the ISM Services PMI exceeded consensus and previous figures by coming in at 52.7, further propelling the US Dollar’s advance.
• The latest report from US Bureau of Labor Statistics indicated that October JOLTs Job Openings fell by nearly 600K to 8.733 million. This figure was well below the consensus of 9.35 million.
• Looking ahead, important upcoming economic releases include the Unemployment Rate, Nonfarm Payrolls, and Average Hourly Earnings on Friday. These figures will hold significant implications for investors and the US Dollar’s trajectory as they could shape the next Fed decisions.
• Current market expectations from the CME FedWatch Tool indicate that a no hike is priced in for the December meeting and that markets are now pricing in rate cuts for mid-2024.

Technical Analysis: US Dollar bullish momentum strengthens, buyers threaten the 20-day SMA

The indicators on the daily chart clearly depict a strengthening of bullish momentum for the US Dollar. Although in negative territory, the Relative Strength Index (RSI) shows a positive slope, while the Moving Average Convergence Divergence (MACD) is printing rising green bars, offering confirmation of prevailing bullish strength.

Evaluating the longer-term scenario, the index is currently positioned beneath the 20 and 100-day Simple Moving Averages (SMAs) but above the 200-day SMA. This means that overall, whilst experiencing some pressure in the short-term, bulls persistently show their presence in the broader picture. That picture hints at a firm upward trajectory. In case buyers advance and conquer the 20-day SMA, further green may be seen in the short term.

Support levels: 103.60, 103.30, 103.15, 103.00.
Resistance levels: 104.10 (20-day SMA),

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