The U.S. Dollar is inching higher against a basket of currencies early Thursday as investors awaited key economic news about the strength of the U.S. labor market. Investors were also positioning themselves ahead of crucial U.S. inflation data on Friday. Meanwhile, some of the short-covering is being tied to investors reacting to the possibility the Federal Reserve is slowly edging towards a discussion about tightening monetary policy.
At 05:26 GMT, June U.S. Dollar Index futures are trading 90.040, up 0.010 or +0.01%.
Looking ahead, U.S. GDP and preliminary prices data is due at 12:30 GMT, along with initial jobless claims. Economists surveyed by Dow Jones are expecting a total of 425,000 Americans to have filed unemployment benefits in the week-ended May 22. In the week prior, jobless claims reached a fresh pandemic-era low of 444,000.
On Friday, economists expect core PCE prices to jump 2.9% year-on-year in April, compared with a year-on-year rise of 1.8% a month earlier.
Finally, although Fed officials have downplayed the recent rise in inflation, U.S. Dollar bears may be beginning to accept that the time to talk about policy changes might be approaching.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 90.910 will change the main trend to up. A move through 89.515 will signal a resumption of the downtrend.
The minor trend is also down. A trade through 90.280 will change the minor trend to up. This will also shift momentum to the upside.
The minor range is 90.910 to 89.515. Its 50% level at 90.215 is potential resistance.
The short-term range is 91.435 to 89.515. If the minor trend changes to up then look for the buying to possibly extend into its retracement zone at 90.475 to 90.700.
Daily Swing Chart Technical Forecast
The direction of the June U.S. Dollar Index on Thursday is likely to be determined by trader reaction to the minor pivot at 90.215.
A sustained move under 90.215 will indicate the presence of sellers. The first downside target is 89.850. Aggressive counter-trend buyers could come in on a test of this level, but if it fails then look for the selling to possibly extend into the 89.515 main bottom.
A sustained move over 90.215 will signal the presence of buyers. The first target is the minor top at 90.280. Taking out this level will shift momentum to the upside. This could trigger a further rally into the short-term retracement zone at 90.475 to 90.700.