US Dollar struggles as buyers digest inflation and labor market data

• US Dollar continues struggling as buyers take a breather.
• US PCE Prices Index fell to 2.1% yearly in September, while the core inflation remains steady at 2.7%.
• US Jobless Claims fall to 216K, against market expectations of an increase to 230K.

The US Dollar Index (DXY) trades softer on Thursday despite persistent inflation in the United States, as measured by the Personal Consumption Expenditure (PCE) Prices Index. Additionally, the number of Initial Jobless Claims decreased more than expected for the last week of October, but the Greenback continues struggling for traction in the latter half of the week.

The DXY index has displayed a mixed path amid conflicting economic data. Strong ADP Employment Change figures and upwardly revised September ADP data were offset by downwardly revised Q3 GDP growth. The upcoming Nonfarm Payrolls (NFP) report on Friday could significantly impact the DXY's direction.

Daily digest market movers: US Dollar eases on profit-taking despite strong data

• The US PCE Prices Index rose moderately by 2.1% YoY in September, lower than the previous 2.2% but below the consensus of 2.2%.
• Core PCE, more relevant for the Fed, remained steady at 2.7%, against market expectations of a decline to 2.6%.
• Despite market consensus expecting an increase to 230K, Initial Jobless Claims fell to 216K in the week of October 25.
• Economists predict the the NFP to hit 113K new payrolls in October, significantly lower than September's 254K. The Unemployment Rate is anticipated to remain unchanged at 4.1%.
• Market participants will closely monitor employment data for insights into the Fed's interest rate decision-making.
• As for now, markets are expecting a 25 bps cut at next week's Federal Open Market Committee meeting next week.

DXY technical outlook: DXY index consolidates near 104.50 support

The DXY index remains consolidating, possibly preparing to retest the 200-day SMA support at 103.50. The Relative Strength Index (RSI) remains elevated near overbought territory but is trending down. The Moving Average Convergence Divergence (MACD) indicator is generating smaller green bars, indicating a weakening momentum.

Supports: 104.50, 104.30, 104.00Resistances: 104.70, 104.90, 105.00