• The DXY Index is trading at 104.7, showing a 0.35% loss, but will end the week with slight gains.
• Continued Good orders from the US were higher than expected, but did not trigger a move in the US dollar.
• The Fed maintains a cautious stance on premature easing of monetary policy, which is an indication with less chance of quick interest rate cuts, which softens the USD.

The US Dollar Index (DXY) is currently trading at 104.7, posting some losses despite positive economic signals. This week, the United States reported solid domestic economic indicators, such as rising flash May PMIs from S&P Global, as well as powerful data on tough goods orders and unemployment claims, which suggest a potential continued recovery in the US dollar. Despite these fundamentals, the DXY index is facing resistance at the 20-day straightforward moving average level and is experiencing selling pressure.

With the U.S. economy showing solid indicators, the Federal Reserve’s (Fed) cautious stance on premature monetary easing will limit any downward movement. April personal consumption expenditures (PCE), the Fed’s preferred measure of inflation, will be released next week, which could change the stance of the central bank’s announcement.

Daily Market Move Summary: DXY Sees Red Despite Signs of U.S. Economic Resilience

• U.S. tough goods orders rose 0.7% in April, after March data was revised down to 0.8%. The April reading exceeded market expectations, which expected a decline of 0.8%.
• Excluding transport, the number of modern orders increased by 0.4%. After the defense was put aside, modern orders remained almost unchanged.
• The Fed remains conscious of premature easing of monetary policy, and Fed members suggest that the containment of interest rates will continue for an extended period. The market probability of a rate cut at the upcoming meetings is approximately 50% in September and 85% in November, with a reduction expected by December.

DXY Technical Analysis: DXY is facing powerful resistance at the 20-day SMA

DXY’s technical outlook paints a mixed picture. The Relative Strength Index (RSI) is trending negatively, indicating ongoing selling momentum. This negative slope means that the bears will gain the advantage in the tiny term. The moving average convergence divergence (MACD) displays flat red bars that indicate continued buying pressure, adding more color to the bearish narrative.

Bulls, despite the headwinds, are showing their resilience as DXY holds above the 100- and 200-day straightforward moving averages (SMAs). This position above long-term averages indicates a bullish bias. However, as long as it remains below the 20-day SMA, the near-term outlook will be painted red.