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

US Dollar, DXY, Jobless Claims, Risk Aversion – Briefing:

US Jobless Claims Creeped Higher as Sentiment Soured

The anti-risk US Dollar and Japanese Yen outperformed their major counterparts on Thursday as haven demand boosted their appeal. Meanwhile, the sentiment-linked Australian and New Zealand Dollars underperformed. The DXY Dollar Index gained 0.64% over the past 24 hours, clocking in the best day since March 15th.

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

While the S&P 500 finished lower by the end of Thursday, tech stocks remained resilient, bolstered by a strong performance from Alphabet Inc, the Google parent company. This followed a demonstration of its A.I. tools and ambitions, which investors cheered. Still, economic jitters remained the focus for financial markets as traders flocked to the safety of Treasuries, pushing up prices as bond yields fell.

Heading into the remaining 24 hours, as well as Friday’s Asia-Pacific trading session, the US Dollar and Japanese Yen may continue capitalizing on US economic woes, which may coincide with a global growth slowdown. That may place regional indices at risk, such as Japan’s Nikkei 225 and Australia’s ASX 200. This may leave AUD/USD and NZD/USD tilted lower as well.

US Dollar Technical Analysis

On the daily chart, the DXY Dollar Index continues to hover above the critical 101.297 – 100.82 support zone. Key resistance is a combination of the 23.6% Fibonacci extension level at 102.58 as well as the 100-day Simple Moving Average (SMA). Clearing these could open the door to an extension higher. Otherwise, turning lower exposes the midpoint of the extension at 98.90.

DXY Daily Chart

Chart Created in TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com