US Dollar, Japanese Yen Gain as US Jobless Claims Spook Markets. AUD/USD at Risk

USD, DXY, Unemployment Claims, Risk Off – Brief:

US jobless claims rose as sentiment deteriorated

The anti-risk US dollar and Japanese yen outperformed their major counterparts on Thursday as safe-haven demand boosted their appeal. Meanwhile, sentiment-related Australian and New Zealand dollars underperformed. The DXY dollar index rose 0.64% over the past 24 hours, marking the best day since March 15th.

Last week, it was revealed that 264,000 unemployment claims were filed in the United States. That was the highest result since October 2021, an increase of 9% compared to the previous reading. This is an early sign that the labor market could be showing signs of collapsing after remaining consistently tight despite aggressive monetary policy tightening from the Federal Reserve.

While the S&P 500 ended lower Thursday, technology stocks remained resilient, buoyed by the strong performance of Alphabet Inc, Google’s parent company. This followed a presentation of its AI tools and ambitions, which was welcomed by investors. However, economic tensions remained a focus of financial markets as traders flocked to the safety of Treasuries, driving up prices as bond yields fell.

With the remaining 24 hours approaching, in addition to the Asia-Pacific trading session on Friday, the US dollar and the Japanese yen may continue to benefit from US economic woes, which may coincide with slowing global growth. This could put regional indices at risk, such as Japan’s Nikkei 225 and Australia’s ASX 200. This could lead to a decline in the AUD/USD and the NZD/USD as well.

Technical analysis of the US dollar

On the daily chart, DXY continues to hover above the critical support area 101.297 – 100.82. The main resistance is the combination of the 23.6% Fibonacci extension level at 102.58 as well as the 100-day simple moving average (SMA). Clearing these can open the door to a higher stretch. Otherwise, a turn lower would expose the midpoint of the extension at 98.90.

DXY daily chart

Chart created in TradingView

– By Daniel Dubrovsky, Chief Strategist for DailyFX.com