U.S. Dollar Index Falls Below 99.65—PMI Miss, Jobless Spike Hit Hard`

DXY dipped to $99.34 on Thursday after failing to break through $99.65. That resistance zone (50 EMA and descending trendline) remains in play for now.

What was behind the move? Underwhelming economic data and geopolitical jitters. Initial jobless claims rose to 222,000 vs 215,000 expected and labor market is cooling. April’s S&P Global Composite PMI fell to 51.2, its weakest since December 2023. Manufacturing PMI was a modest surprise at 50.7 but services PMI disappointed at 51.4 vs 54.4. Together, the numbers point to slowing growth and fading post-pandemic momentum.

Trump’s Tariff Rhetoric Clouds the Outlook

Beyond economic data, investor sentiment is also being influenced by renewed trade tensions. The White House is preparing a new tariff package on China and markets are getting nervous. Treasury Secretary Scott Bessent said any meaningful de-escalation would require mutual cooperation—something markets don’t believe.

Adding to the caution, Fed Chair Jerome Powell warned this week that rising tariffs could put inflation and employment goals at risk but the Fed is still in “wait-and-see” mode on rate moves.

Technical Outlook: $98.84 Is the Line in the Sand

From a charting perspective, DXY’s failure to break $99.65-$100.27 has shifted focus back to support at $98.84. This is a big zone. A clean break below it could send DXY to $97.91 or even $96.80 if risk appetite increases and macro headwinds persist.

Trade Setup for New Traders:

• Sell Entry: Below $98.84 with confirmation (e.g. strong red candle or MACD crossover)

• Targets: $97.91 and $96.80

• Stop Loss: Above $99.65 to manage risk

Current Technicals:

• 50 EMA: Above current price, acting as dynamic resistance

• MACD Histogram: Flattening—momentum is fading

• Pivot Zone: $98.84 – Watch for daily close below this levelA daily close below $98.84 would confirm the trade. Above $100.27 and the setup is invalid and $101.28 and $102.11 would be in play.

Conclusion

With softer data, rising jobless claims and tariff threats, the dollar is losing its way—for now. But this isn’t a free fall. It’s a cautious correction in a high risk macro environment. Trade patiently and wait for confirmation not prediction. Volatility is back and this market favors confirmation over prediction.