United States Dollar Index gains ahead of weekly Initial Jobless Claims data

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is gaining ground for the fourth consecutive day and trading around 101.20 during European hours on Thursday.

The Greenback rises amid ongoing hawkish sentiment surrounding the Federal Reserve's (Fed) policy outlook. This momentum was supported by the latest Flash US S&P Global PMI data for September, which showed manufacturing expanding higher than expected at 52.0, helping to offset minor pullbacks in composite and services activity.

CME FedWatch Tool indicates that market expectations for a 25-basis-point Fed rate hike in October surged to nearly 69%, up sharply from 55.4% a day ago. Market participants are now focused on the upcoming US weekly Initial Jobless Claims report, as several Fed officials continue to support recent rate increases and warn against persistent inflation risks.

US 10-year yield extends uptrend as Societe Generale flags stretched move

Strategists at Societe Generale note that the US 10-year Treasury yield “has crossed its 2023 peak (5.02%), resulting in an extension of the uptrend” and is “now challenging the upper boundary of a multi-month ascending channel.” While they acknowledge that the latest leg higher “appears somewhat stretched,” they add that “signals of a meaningful pullback are not yet visible,” suggesting the trend remains intact for now.

Technical Analysis: DXY rises due to prevailing bullish bias

In the daily chart, Dollar Index Spot trades at 101.20. The index holds a clear bullish bias as price stands above both the nine-period Exponential Moving Average (EMA) at 100.43 and the 50-period EMA at 99.85, suggesting a supportive underlying trend structure. The 14-day Relative Strength Index (RSI) at 72.34 shows overbought conditions, hinting that the latest upswing may be stretched but not yet reversing, while the rising FXS Fed Sentiment Index at 148.81 reinforces a pro-dollar backdrop.

On the downside, immediate support is seen at the nine-day EMA, with a deeper technical floor at the 50-day EMA if corrective pressure extends. As long as the Dollar Index spot holds above these moving average supports, the path of least resistance remains to the upside, with any pullbacks likely to be treated as consolidation within the prevailing bullish trend rather than a durable top.