U.S. Dollar Index risks deeper losses if jobless claims surprise above 236K
U.S. Dollar Index stuck in narrow range as weak data fuels uncertainty
The U.S. Dollar Index is trading in a narrow and indecisive range this week, showing signs of fragility as macroeconomic data weighs on sentiment.
Since the beginning of the week, the index has moved between 98.15 and 98.97, failing to establish direction beyond a tight 0.8% range. This consolidation has kept price action trapped around the critical 98.50 level, which has acted as a pivot for both buyers and sellers throughout the week.
Highlights
-The U.S. Dollar Index trapped in a tight 0.8% range this week as weak U.S. data caps upside
-Bearish momentum persists as RSI and EMAs tilt downward across timeframes
-Thursday’s jobless claims may decide whether DXY breaks below 98
Wednesday's sharp move lower came after weaker-than-expected U.S. employment data. The ADP Non-Farm Employment Change showed a dismal print of 37K, far below the forecast of 111K. This triggered bearish pressure as the figure points to softness in the labor market, a key metric for gauging the strength of future consumer spending. The pressure was further reinforced by ISM Services data, which showed contraction in the U.S. services sector for the first time in nearly a year. Together, these readings flagged a deterioration in business conditions and economic confidence, pushing the dollar lower.
The U.S. Dollar Index price dynamics (Oct 2024 - May 2025). Source: TradingView
Although today's session began on a firmer footing, with price rebounding from the Asian session low at 98.24, the index met resistance at 98.50 during European hours. It has since retraced slightly to 98.44, posting a modest 0.15% gain for the day. However, the index is still on a 0.55% weekly loss, reflecting a weak start to June.
The U.S. Dollar Index volume thins amid bearish RSI momentum across daily and 4H charts
Technically, momentum indicators are leaning bearish. The Relative Strength Index on both the daily and 4-hour chart is pointing lower, suggesting sellers are still in control. The 20, 50, and 100 exponential moving averages on the 4-hour timeframe are also aligned to the downside, confirming short-term pressure. That said, volume has been thinning for five straight sessions, which may suggest a wait-and-see mood ahead of fresh catalysts.
Focus now turns to the U.S. unemployment claims report expected later today. The forecast is 236K. If the actual figure comes in lower than that, it would indicate fewer people are filing for unemployment, an encouraging sign for the labor market. This could trigger a rebound in the dollar, thus allowing the index to reclaim 98.50 and possibly push back toward the week’s opening price near 98.97. On the other hand, if claims come in higher than 236K, it would confirm further labor market weakness and likely drag the dollar lower toward the multi-month support level at 97.50.
The U.S. Dollar Index bounced after strong hiring data boosted confidence in the economy. Price reclaimed 98.50 and rose toward 98.88 following a sharp rebound from 98.15.
