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Focus Shifts to Employment Data
Central Bank
Summary:
The Federal Reserve's hawkish stance and the robust US economic outlook may limit downside risks to the economy.
Sell
PENDINGUSDX
EXP
107.300
Entry Price
103.360
TP
108.400
SL
106.360 +0.120 +0.11%
--
Point
PENDING
103.360
TP
CLOSING
107.300
Entry Price
108.400
SL
Fundamentals
The US Dollar Index (USDX), which measures the dollar's value against a basket of currencies, traded near 106.10 on Monday, slightly lower but recovering most of its intraday losses to close above 106.30.
This week, attention in developed markets has shifted back to US employment data. Nonfarm payrolls increased by only 12,000 in October, significantly below expectations. Hurricane Milton caused massive unemployment in Florida, reducing employment by 38,000, whereas the state typically sees an increase of 13,000 jobs during this period.
Hurricane Milton had a significant impact on the employment data. With those issues now resolved, this week's employment figures are likely to improve. A 4.2% unemployment rate is expected, a critical figure for the Fed ahead of its December meeting.
The likelihood of a Fed rate cut in December would increase if the unemployment rate rises to 4.2% and job growth reaches around 220,000, which could weaken the dollar.
Technical Analysis
Last week, bolstered by a major policy shift from US President-elect Donald Trump, the USDX gapped higher on Monday's open, surging strongly and breaking out of a wide consolidation range that had persisted since November 21, 2022. This move generated an initial reversal signal, lifting the index further from the 100.15 bottom level.
After four days of pullback, this signal remained intact within the support trendline of the ascending channel and was reinforced by the daily baseline near the 105.60 region.
While further gains are expected, we believe the pullback has been overly compressed, suggesting the asset could test the 107.30 level again in the short term before experiencing a sharp decline to the 104.60 range to establish a structurally sound upward adjustment.
Overall, the near-term trend is expected to remain bullish and maintain the one-month uptrend channel which points toward a stable upward trajectory. However, further structural adjustments are needed to confirm this reversal signal.
Trading Recommendations
Trading Direction: Sell
Entry Price: 107.30
Target Price: 103.36
Stop Loss: 108.40
Valid Until: Dec 17, 2024 23:55:00
Support: 106.09, 105.60, 105.32, 105.00
Resistance: 106.50, 106.81, 107.10, 107.46
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