The strength of the US dollar has fallen again in recent hours. In question, the publication of certain data on the American economy, in particular the consumer price index and requests for unemployment benefits. Here's what it is.
The US dollar index flirts with the score of 104
The US dollar suffered a correction following the latest release of the Consumer Price Index (CPI). A priori, this trend highlights a slowdown in the rate of inflation. However, the data published this Thursday, in particular those concerning applications for unemployment benefits, further dampened the strength of the dollar. These reached almost 1.8 million, leading the US dollar index to flirt with the 104 mark.
It should be noted that after the publication of the CPI signaling a resumption of disinflation in April, the dollar initially suffered a depreciation. A dynamic which is part of a broader context of easing economic pressures. Recent data also reflects this feeling. This is particularly the case for the S&P 500, which reached record levels in response to signs of falling inflation. However, Federal Reserve officials are calling for interest rates to be maintained, warning the public against overly optimistic expectations.
Dollar situation from a technical point of view
From a technical perspective, the US Dollar Index is under downward pressure, after breaching key support levels. The 55-week simple moving average (SMA) at 103.83 is crucial, as a break below it could accelerate the decline towards a score of 100. Conversely, a return to levels such as the simple moving average of 55 days at 104.68 could signal a potential recovery.
At the same time, weekly applications for unemployment benefits in the United States saw an encouraging decline. Indeed, new claims fell by 10,000 to 222,000 in the week ending May 11, although slightly above forecasts. This trend certainly suggests a gradual improvement in the job market which could be favorable to the dollar.
The current situation of the US dollar reflects an economic complexity where signals of disinflation and variations in the job market coexist. Investors should remain vigilant for potential fluctuations, as the Fed's next moves will play a crucial role in the movement of the currency.
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