- US Dollar lost ground on lower-than-anticipated Retail Sales figures, which fuel dovish bets on the Fed.
- Markets are digesting comments from Fed officials for placing their bets on the rate cut cycle.
- Investors continue challenging the Fed and bet on more than one cut in 2024.
On Tuesday, the US Dollar, as measured by the DXY Index (DXY), registered a decline, settling at 105.30. This downturn was mainly invoked by markets reacting to recent comments from Federal Reserve (Fed) officials in combination with the less than anticipated Retail Sales data for May.
The US economic outlook is riddled with mixed signals, but signs of disinflation are starting to arise, which may weaken the USD.
Daily digest market movers: DXY under pressure on disappointing Retail Sales figures
- Markets are now processing words from Fed speakers along with the just-released Retail Sales figures for May.
- On the data front, the US Census Bureau reported May's Retail Sales data growth at a slower pace of 0.1% against the projected 0.2%.
- A softening in Retail Sales growth could potentially affect the US Dollar by affirming investors' belief in the ongoing disinflation process.
- Regarding the Fed speakers, Cleveland Fed President Loretta Mester expressed her preference to observe a "longer run of good-looking inflation data" before any significant decisions are taken.
- Simultaneously, Neel Kashkari, President of the Minneapolis Fed, intimated that the Fed might wait until December for any further rate cuts, favoring the acquisition of more data before any actions are undertaken.
- Several other speakers will be on the wires on Tuesday, and their words might shake the USD.
DXY technical analysis: Momentum flattens, bulls running out of time
Technical indicators suggest a flattening momentum but still retain a positive stance. The Relative Strength Index (RSI) remains above the 50 level, while the Moving Average Convergence Divergence (MACD) continues to print green bars.
With the bullish activity taking a pause, the DXY Index continues to hold above its 20, 100 and 200-day Simple Moving Average (SMA). The slowing down of the momentum from last week might indicate a possible slowdown in the recent rally of the DXY.
