USD Continues to Recuperate As Data Doesn’t Indicate Recession

Today the European session was quiet, with few headlines due to Ascension Day in Europe and no major economic releases. However, the USD continues to crawl higher, testing key levels in many forex pairs. EUR/USD is approaching support at 1.0760s, but large option expiries are limiting downside pressure. USD/JPY is near recent highs around 139.70, with buyers seeking a breakout towards 140.00.

Despite the positive sentiment in equities, with European indices rallying and US futures slightly higher, the USD remains resilient. GBP/USD has slipped 0.6% as it dipped below 1.24, continuing its retreat, while AUD/USD is down 0.3% to 0.66 lows, due to weaker jobs data. It is not often you see the USD moving higher while stocks performing well at the same time, but that is the current market situation.

Traders initially priced in dovish FED expectations after the regional banking crisis, but this may be backfiring as high inflation keeps the FED committed to maintaining higher rates for a more extended period. The US economy also continues to hold up well. Today’s unemployment claims dipped lower. So, we remain bullish on the USD and are looking to buy the retreats lower.

US Initial Jobless Claims and Continuing Claims

• Initial jobless claims 242K versus 254K estimate
• 4-week MA of the initial jobless claims 244.25K versus 245.25K last month
• Continuing claims 1.799M vs 1.818M estimate. Last week 1.807M revise from 1.813M last week.
• 4-week moving average of the continuing claims was 1.813M vs 1.828M last week

Looking at the continuing claims, the data is showing a sideways to downtrend over the last few months. That is indicative of workers finding new jobs even if they are let go.

The data this week corresponds with the BLS jobless survey for the employment report to be released on the 1st Friday of next month.

EUR/USD