The US Dollar Index (DXY) is around 104.20 and is trading with slight gains against its rivals on Tuesday. After the durable goods and housing market data, the dollar remains stable while the markets wait for new drivers to continue betting on the next decisions of the Federal Reserve (Fed).
The US economy is on a delicate path: inflation remains rigid and economic activity shows some weakness. Jerome Powell confirmed the bank’s persistence in not overreacting to the high inflation figures at the beginning of the year, while the bank did not change its interest rate projections from 2024. The start of easing is still expected from June, but incoming data will still dictate the timing.
Daily Market Movers Summary: DXY Slightly Above PCE Figures, Markets Digest Mid-Level Reports
The S&P Dow Jones Indices economic report showed that S&P/Case-Shiller home prices fell 6.6% annually in January, slightly below expectations.
The house price index reported by the Federal Housing Finance Agency (FHFA) in January saw a slight drop of 0.1% in the same month.
The US Census Bureau reported that durable goods orders rose 1.4% month-over-month in February, beating the consensus of 1.1% and showing significant improvement from the previous drop of 6.9%. .
Overall personal consumption expenditure (PCE) is expected to have increased 2.5% year-on-year, while the core measure is expected to reach 2.8%. The outcome of the Fed’s preferred inflation gauge will dictate the pace of the dollar in the near term.
DXY: DXY bullish momentum softens, outlook remains bright
On the daily chart, the Relative Strength Index (RSI) shows a picture of flat momentum, suggesting a link between buying and selling pressure. At the same time, the Moving Average Convergence Divergence (MACD) offers a flat path with green bars, indicating a stagnation in purchasing power, which could be a sign that the bulls are taking a breather.
Despite the short-term slowness, the outlook over a longer time horizon appears encouraging. The DXY is well positioned above the 20-day, 100-day, and 200-day SMA, a strong sign of considerable bullish control and an overall uptrend.
To add more context, the market is coming off a successful week with 1% gains, which could explain the current pause in bullish momentum. Traders could take advantage of this respite to reassess the market and potentially find new entries for a continued uptrend.