07 Mar 2025

1. The US Dollar Index (DXY) continues to decline on Thursday, influenced by new labor market and trade data that exert further pressure on the currency.

The Challenger Job Cuts report indicates a significant increase in layoffs, while the latest weekly jobless claims present a mixed assessment of the labor market.

Prior to the Asian trading session, the dollar experienced a slight recovery, alleviating some of its daily losses, following comments from Federal Reserve's Waller, who indicated that he does not foresee any rate cuts in the upcoming March meeting.

In a related development, the European Central Bank (ECB) implemented a widely expected reduction in interest rates, with President Christine Lagarde underscoring the necessity for increased vigilance amid prevailing economic uncertainties.

Daily market movers summary: US Dollar declines following additional soft labor data, ECB actions

The recent Challenger Job Cuts report for February indicated a significant increase in layoffs, more than doubling the figures from January. Continuing Jobless Claims rose to nearly 1.90 million, highlighting ongoing difficulties in the labor market, even as Initial Jobless Claims decreased to 221,000. The European Central Bank has reduced its deposit rate by 25 basis points to 2.50 percent, in line with market expectations, while maintaining a consistent policy approach. Additionally, the ECB has revised its inflation forecast for 2025 upwards, raising concerns that ongoing price pressures may complicate future policy decisions. Christine Lagarde underscored the necessity of a data-driven strategy, emphasizing the need for the ECB to remain adaptable in a volatile economic landscape. In terms of Federal Reserve expectations, the CME FedWatch Tool indicates an increasing likelihood of a rate cut by the Federal Reserve in June, with probabilities exceeding 85 percent. The upcoming Nonfarm Payrolls report for February will be pivotal, as the results regarding job additions and wage inflation will significantly influence the trajectory of the USD.

DXY technical outlook: Bearish trend intensifies

The US Dollar Index (DXY) is experiencing significant downward pressure, having fallen below critical support levels. The 20-day and 100-day Simple Moving Averages (SMA) are approaching a bearish crossover, which further emphasizes the prevailing negative momentum. Additionally, the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are both indicating a bearish trend, pointing to potential further declines. Should DXY fail to establish support around the 103.00 mark, the next significant level to monitor is 102.50, which may signal the continuation of the ongoing selloff.