The US Dollar (USD) Index closed the week at 103.35 on the DXY, facing losses after the release of weaker-than-expected Personal Consumption Expenditures (PCE) data for December. The DXY struggled to consolidate above the 200-day Simple Moving Average (SMA) but managed to secure a 0.20% gain for the week.
The softer Core PCE Price Index for December, which came in at 2.9% compared to the consensus of 3%, fueled expectations of possible rate cuts by the Federal Reserve (Fed) in March. However, if the US economy remains resilient, the likelihood of a March rate cut diminishes, and market bets are shifting towards an easing cycle starting in May. The downside for the US Dollar in the short term is limited if expectations for rate cuts are delayed.
The technical analysis indicates a struggle between buying and selling pressure. The Relative Strength Index (RSI) shows a negative slope but remains in positive territory, suggesting diminishing buying momentum. The Moving Average Convergence Divergence (MACD) also signals a decline in upward pressure. While the DXY is holding above the 20-day SMA, indicating short-term bullish attempts, it remains below the 100 and 200-day SMAs, reflecting a longer-term bearish trend.
Support Levels: 103.30, 103.00, 102.80, 102.60 (20-day SMA).
Resistance Levels: 103.50 (200-day SMA), 103.70, 103.90.
