The US Dollar (USD) has seen a modest two-day gain, despite the US Dollar Index (DXY) still showing a weekly decline following Monday’s significant drop. While the JOLTS Job Openings report for April revealed a decrease in available positions, the continued willingness of employers to offer higher wages remains a concern for US inflation.

Market focus has shifted to the ADP Employment Change data and the Institute for Supply Management (ISM) Services PMI. The ADP report indicated a smaller-than-expected increase in employment, while the ISM data revealed a rebound in the services sector, contrasting with the weaker manufacturing sector report that contributed to Monday’s USD decline.

Earlier releases, such as the Mortgage Bankers Association’s Mortgage Applications number, also pointed towards a softer economic picture. However, the ISM Services PMI data showed unexpected strength, with the employment component jumping from 45.9 to 47.1, and the headline PMI rising back into growth territory at 53.8.

Market sentiment has improved, with equities trading in positive territory across both European and US markets. Fed Fund futures pricing suggests a reduced likelihood of an interest rate hike in September, with a higher probability of either an unchanged rate or a rate cut.

Technical Analysis: DXY Recovers but Faces Resistance

The US Dollar Index (DXY) is attempting a recovery, but faces resistance at the 200-day and 100-day Simple Moving Averages (SMAs), both situated around 104.43. Additional resistance is expected near the pivotal level of 104.60 and the 55-day SMA coinciding with the recent peak at 105.12.

On the downside, the Greenback is finding support at the 104.00 level. A break below this could trigger further declines towards 103.50 and even 103.00. The Relative Strength Index (RSI) remains above oversold levels, suggesting the potential for further downside movement.