The US Dollar continued to gather strength against its rivals early Thursday after surging higher on Wednesday. The USD Index – which tracks the USD's valuation against a basket of six major currencies – touched its highest level in nearly a month above 102.50 in the European session. Global rating agency Fitch announced late Tuesday that it downgraded the US government's credit rating to AA+ from AAA, citing anticipated fiscal deterioration over the next three years and a high and growing general government debt burden. This development caused market participants to stay away from risk-sensitive assets, allowing the USD to find demand as a safe haven. Wall Street's main indexes suffered large losses on Wednesday and US stock index futures trade in negative territory on Thursday.
The US economic docket will feature weekly Initial Jobless Claims data later in the day The ISM services PMI survey for July and Unit Labor Costs data for the second quarter will also be watched closely by market participants. The US Dollar Index (DXY) registered a daily close above 102.50 on Wednesday, where the 50-day and the 100-day Simple Moving Averages are located. 103.00 (psychological level, static level) aligns as the next immediate resistance ahead of 103.70 (200-day SMA) and 104.30 (static level from May) could be set as next bullish targets. Looking south, sellers could show interest if DXY returns below 102.50. In that scenario, 102.00 (psychological level, static level), 101.30 (20-day SMA) and 101.00 (psychological level, static level) could be seen as support levels.