US Dollar closes the week soft, markets digest cautious Fed
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Cautious Fed officials and robust Q2 growth limits the USD downside. Markets continue to bet that the easing cycle will start in September. If data continues to underperform, the Fed might consider a July rate cut. The US Dollar Index (DXY) is currently trading at 104.50, maintaining a neutral stance. Strong The overall Q2 growth backed by the Federal Reserve’s (Fed) cautious stance has offered mild gains to the US Dollar at the end of the week. Despite some signs of softness, the US economy continues to exhibit robust growth in Q2 overall, directly influencing the cautious stance adopted by Fed officials. This reluctance to implement rate cuts seems to be keeping the Greenback afloat and limiting the downside. Daily digest market movers: DXY stands neutral ahead of the weekend, Fed remains cautious April’s Consumer Price Index (CPI) and Retail Sales figures, plus an increase in weekly Initial Jobless Claims, prompted the US Dollar to lose value earlier this week. Raphael Bostic, President Atlanta Fed, speaks positively about inflation progression in April but declares the Fed is not prepared to lower the policy rate. Loretta Mester, President of Cleveland Fed, feels the monetary policy positioning is fitting as data comes under review. Thomas Barking of the Richmond Fed believes that current inflation rates still have targets to meet. According to CME FedWatch Tool, markets are betting on higher odds of the first cut coming in September. DXY technical analysis: DXY outlook remains negative despite indicators flattening The daily chart indicators are exhibiting signals of uncertainty. Despite the Relative Strength Index (RSI) staying flat in negative territory, it does not fully endorse the presence of a robust selling momentum. Similarly, the Moving Average Convergence Divergence (MACD) is flat with red bars, indicating a potential pause in the aggressive bearish trend. On…
Filed under: News - @ May 18, 2024 7:12 pm