- DXY Index is trading near 104.00, up for Thursday’s session.
- Core PCE Price Index matched predictions.
- Markets continue delaying rate cuts from the Fed, which favors the Greenback.
Hovering around the 104 mark, the US Dollar Index (DXY) continues to gather strength, driven by market sentiments delaying anticipated rate cuts from the Federal Reserve (Fed). The latest data on Personal Consumption Expenditures (PCE) brought no unexpected revelations.
Unless there is clear and conclusive evidence of a decline in inflation within the United States, the Fed remains hesitant to hasten rate cuts. Furthermore, market expectations are currently in sync with the forecasts from the central bank, with a consensus anticipating a 75 basis points easing in 2024, set to commence in June
Daily digest market movers: US Dollar holds gains, PCE decelerated as expected in January
On Thursday, the US Bureau of Economic Analysis reported a decline in the inflation rate in the United States, measured by the annual change in the Personal Consumption Expenditures (PCE) Price Index, from 2.6% in December to 2.4% in January. Meeting expectations, the Core PCE Price Index showed a year-over-year increase of 2.8%.
Given the absence of definitive signs indicating a decline in inflation within the US economy, market sentiment is now postponing the anticipated start of easing to June. The probabilities of rate cuts in March and May are currently deemed low.
Technical analysis: DXY Bulls make a move to reclaim 100-day SMA
The daily chart indicators signal a favorable turn in buying momentum. Notably, the Relative Strength Index (RSI) demonstrates an upward trajectory, indicating a robust bullish trend with its positive positioning in the territory. However, the Moving Average Convergence Divergence (MACD) depicts stagnant red bars, hinting at potential bearish pressure that may lead to selling activity without necessarily prompting a significant shift in the overall trend.
In the broader technical context, despite the prevailing bearish influence, which has driven the pair below the 20-day Simple Moving Average (SMA), the steadfast positioning above the 100 and 200-day SMAs suggests that buyers maintain control in this scenario.
