• DXY lost some ground and fell to 100.60.
• The Conference Board’s consumer confidence data for September fell compact of expectations.
• Federal Reserve officials are questioning current dovish market expectations.

The U.S. Dollar Index (DXY), which measures the value of the dollar against a basket of six currencies, posted some losses Tuesday following the release of the Conference Board’s consumer confidence data. Meanwhile, Federal Reserve (Fed) officials appeared to be trying to fend off aggressive dovish market bets.

The U.S. economy is showing mixed signals, pointing to both a slowdown and continued resilience. Economic activity appears to be moderate, but some sectors remain forceful. The Fed has indicated that the trajectory of its monetary policy will be determined by evolving economic data, suggesting that the pace of interest rate adjustments will depend on incoming information.

Daily Market Factors Review: US Dollar Falls on Surprising CB Consumer Confidence and Fed Speakers

• The U.S. consumer confidence index unexpectedly fell in September to 98.7, a lower-than-expected reading.
• The market expects the Fed to over-ease, pricing in cuts of 75 basis points by the end of the year and 175-200 basis points over the next year.
• Some Federal Reserve officials, including Neel Kashkari of the Federal Reserve Bank of Minneapolis and Michelle Bowman, have pushed back against the market’s dovish expectations.
• Bowman disagreed with the recent 50 basis point cut in interest rates, favoring a 25 basis point cut, and warned that a larger cut could make it harder to fight inflation.
• She highlighted ongoing inflation risks, including supply chain disruptions and fiscal policy, and continued to take a cautious view of the labor market.
• Other Federal Reserve officials, such as Raphael Bostic of the Federal Reserve Bank of Atlanta and Austan Goolsbee of the Federal Reserve Bank of Chicago, have expressed concerns about the labor market and support faster rate cuts.
• Markets are still expecting 75 basis points of monetary policy easing this year.
• On the positive side for the US dollar, the divergence in global economic growth is supporting the US dollar, with the eurozone, Australia and China showing signs of weakness.
• The US 10-year benchmark rate has fallen from its September high and now stands at 3.75%.

DXY Technical Outlook: DXY Maintains Bearish Momentum, Bulls Struggle

Technical analysis of the DXY index reveals a downtrend, supported by the Relative Strength Index (RSI) at around 40 and the Moving Average Convergence Divergence (MACD) printing descending green bars. With the index below the 20, 100 and 200-day Simple Moving Averages (SMA), the technical outlook remains clearly bearish. A break of the 20-day SMA would slightly improve the outlook

Support levels are found at 100.50, 100.30 and 100.00, while resistance levels are found at 101.00, 101.30 and 101.60.