- The US dollar fell following the release of sentiment data from the University of Michigan and housing market data.
- Markets still believe in an interest rate cut in September.
- Greenback may continue to be sensitive to data releases.
On Friday, the US dollar (USD), as measured by the US dollar index (DXY), fell following the release of the University of Michigan’s consumer sentiment index and worse-than-expected housing market data.
According to the US economic outlook, a careful assessment of the data suggests that the US economy is continuing to grow above trend. This illustrates the market overpricing aggressive easing as the Federal Reserve (Fed) remains data dependent.
Daily Market Factors Review: Dollar Down on Mixed UoM and Weak Housing Data
- The University of Michigan Consumer Sentiment Index improved in early August to 67.8, up from July’s reading of 66.4. It also beat market expectations of 66.9.
- After falling to 60.9 from 62.7, the Current Conditions Index recorded a decline, while the Consumer Expectations Index recorded an augment to 72.1 from 68.8.
- In the US, housing starts fell 6.8% in July to 1.238 million units, indicating a weakening housing market.
- In addition, the number of building permits fell by 4% after increasing by 3.9% in June.
- Markets still believe the Fed will cut interest rates soon, but everything will depend on incoming data.
DXY Technical Outlook: Consolidation Continues, Overall Bearish Bias Remains
Technical analysis points to a sideways trend in the DXY, with indicators showing deep consolidation in negative territory. The Relative Strength Index (RSI) is currently around 40, and the red bars of the Moving Average Convergence Index (MACD) are stabilizing, suggesting subdued price action. Despite the gains recorded on Thursday, the overall technical picture remains bearish. Buyers are struggling to make a significant move, as the DXY index is trading in the 102.50-103.30 channel.
Support Levels: 102.40, 102.20, 102.00
Resistance Levels: 103.00, 103.50, 104.00
