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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Avatradescn Forex Market Review]: After the US data is optimistic, the US dollar index recovers lost ground and returns to 96.50". Hope it will be helpful to you! The original content is as follows:
During the European session on Wednesday, July 2, the dollar traded on a moderately positive tone, supported by strong U.S. jobs data and modest improvements in manufacturing activity, which eased pressure on the Fed to cut interest rates.
The U.S. dollar index, which measures the value of the dollar against the world's largest currency trading volume, rebounded from a three-year low of 95.90 on Tuesday and attempted to return above 96.50 at the time of writing.
On Tuesday, the Federal Reserve Powell insisted that the bank needs to learn more about the potential impact of Trump’s tariffs on inflation before cutting interest rates. Soon after, the increase in job openings in the United States increased more than expected, highlighting the flexibility of the labor market and supporting Powell's view.
Also on Tuesday, the U.S. ISM manufacturing index improved beyond expectations, and the output sub-index returned to expansion levels after experiencing the past three months of contraction.
Today's focus is on U.S. ADP job changes, which are expected to show a significant increase in new jobs and may raise investors' hopes for Thursday's U.S. non-farm jobs report. This situation may help the dollar to expand its recovery.
Technical Analysis of the US dollar index
The US dollar index rose slightly after falling to its lowest level since February 2022. The index remains under pressure, moving within a clear downward channel. 50-EMA and 200-EMA continue to act as resistance levels, currently at 97.07 and 97.99, respectively.
The market focus is on upcoming U.S. labor market data, and ADP on Wednesday and non-farm employment on Friday are expected to affect the near-term direction. Expectations of interest rate cuts remain high, with a 75% chance of a rate cut by September.
At present, the US dollar needs to continue to break through 97.20 to challenge a broader downtrend. Without a strong catalyst, the index could return to support at 96.10 or even 95.82 in the www.aihuatrade.coming trading days.
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