The US Dollar Index (DXY) trades at 104.95, registering mild losses. Robust US economic data, including strong JOLTs figures, has led markets to reassess their confidence in a June Fed rate cut. This week’s labor market reports, particularly the crucial ADP data, will continue to shape expectations.
Resilient US Economy, Cautious Fed
The US economy continues to show resilience, leading the Federal Reserve (Fed) under Chairman Powell to maintain a cautious approach. Despite upward inflation revisions, the Fed is avoiding overreactions to short-term price fluctuations. While the potential for monetary easing in June remains, this decision hinges on incoming economic data. Tuesday’s slate of Fed speakers will offer further insights.
Technical Outlook: Bullish Momentum Waning
The daily chart for the DXY reveals signs of weakening bullish momentum. The Relative Strength Index (RSI) remains in positive territory but exhibits a downward slope. Decreasing green bars on the Moving Average Convergence Divergence (MACD) further signal a potential slowdown in upward trajectory.
Despite these short-term bearish signals, the DXY remains firmly above its 20, 100, and 200-day Simple Moving Averages (SMAs), indicating a continued bullish bias within the broader timeframe.
