AI fears overtake Democratic sweep as Nasdaq enters correction territory
Investors on Wall Street continued to rotate out of tech stocks on Thursday, reversing a brief post-election rally as the Nasdaq Composite fell into correction territory. The tech-heavy index had declined 4.17 per cent as of 10.43am ET. The S&P 500 slid 2.68 per cent and the Dow Jones Industrial Average fell 880 points, or 1.65 per cent, erasing roughly half of the previous session's gains that…
The US Dollar Index (DXY) experienced a significant decline to its monthly low near 101.00 following the Democratic party's success in the US midterm elections. This political victory raised concerns about potential political gridlock in Washington, leading to increased selling pressure on the US Dollar. Furthermore, expectations of a quick resolution to the Middle East conflict triggered a drop in oil prices, adding to the downward pressure on the Greenback.
However, hopeful economic data, such as the ADP employment report showing a higher-than-expected increase in private-sector hiring, provided some support for the US Dollar. The ADP report revealed a 86,000 increase in October, surpassing earlier expectations of 69,000 despite a downward revision of September's figure to 86,000 from 90,000.
The ISM Services PMI also slightly decreased to 54.5 from 54.9, slightly below the 54.8 forecast, but still remained within the expansion range. Investors are now eagerly anticipating upcoming economic indicators, including the weekly US Initial Jobless Claims on Thursday and the Nonfarm Payrolls (NFP) report on Friday. Meanwhile, technical analysis suggests that the Dollar Index trades at 101.20 and is currently below both the nine-period and 50-period Exponential Moving Averages (EMAs), indicating a bearish near-term bias.
Until these moving averages are breached, the technical outlook suggests that rallies towards these levels are likely to be met with selling pressure, keeping the US Dollar vulnerable to further declines.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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