Dollar’s Weakness Continues After Abysmal Initial Jobless Claims

17 December 2020 | Updated: 22 December 2020

The fall of the dollar intensifies today after the data on employment turned out to be worse than expected. In addition, markets tend to be in risk mode as traders remain optimistic that a stimulus deal could be reached in Congress soon.

The dollar’s weakness continues today amid moderately risky markets. The FOMC rate decision the day before caused little reaction in the markets, and the dollar is following a short-term trajectory.

The dollar index still holds the psychological support of 90 at the moment, even though the dollar is trading as the worst index in a week. The level coincides with the forecast for 38.2% from 102.99 to 91.71 from 94.30 to 90.00. Although, since EUR/USD has already broken through the 1.2177 resistance, the dollar sell-off could start at any moment.

In a bearish case, the next downtrend target will be the 61.8% forecast at 87.34. However, a rebound from the current level followed by a break of the 91.23 resistance should indicate a short-term bottom and lead to a rebound. Then the expansion of the downtrend will be delayed until the beginning of the first quarter.
Abysmal Initial Jobless Claims
Data released Thursday showed that the number of initial jobless claims jumped to the highest level since September in the week ending December 12. The unexpected rise in the number of initial claims for unemployment benefits is another sign that the labor market recovery is rolling back.

The number of initial applications for unemployment benefits in the United States rose by 23 thousand to 885 thousand, which is much higher than expected to fall to 780 thousand. The four-week moving average of initial claims rose from 34.3 thousand to 812.5 thousand. For the week ended December 5, continuing claims fell by -273 thousand to 5508 thousand.

It was also published that the number of houses being commissioned in November rose to 1.55 million on an annualized basis. Building permits rose to 1.64 million sq. M. The Philadelphia Fed Manufacturing Index fell sharply to 11.1 from 26.3, falling short of expectations of 20.0.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.