US dollar stable as markets digest mid-level data

The US dollar remains stable at the end of the week and remains in the consolidation phase.
Fed officials remain cautious on inflation as tough goods orders are lagging market expectations.
Markets continue to see two cuts for the rest of the year.

The U.S. economy remains solid, with GDPNow reporting third-quarter growth of 3.4%. Good economic prospects may prompt the Federal Reserve (Fed) to adopt a more cautious stance. Meanwhile, investors are certain of two cuts by the end of 2024.

The U.S. economy remains solid, with the Atlanta Fed’s PKBNow model tracking third-quarter growth at 3.4% and the New York Fed’s Nowcast model projecting growth of 3.0% in the third quarter and 2.6% in the fourth quarter .

Daily Market Change Summary: US Dollar Up, While Merchandise Orders Fall Below Estimates

Orders for tough goods in the US fell by 0.8% m/m in September, slightly better than market expectations of a decline of 1%.
After excluding transport, the number of modern orders increased by 0.4%. After excluding defense, the value of modern orders fell by 1.1%.
Transportation equipment, which has been degenerating for three of the last four months, contributed to the overall decline in orders for tough goods.
On the positive side, the Michigan Consumer Sentiment Index rose to 70.5, exceeding expectations and helping the US dollar avoid losses.

DXY Technical Outlook: DXY Surpassed 200-Day SMA, Currently Consolidating

The DXY index broke through the 200-day SMA this week, but excessive expansion forced a retreat. The index is now expected to consolidate, correcting overbought conditions.

Despite late-week gains, the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) remain dangerously close to overbought territory, so investors should consider possible losses for the index. Support is at 104.50, 104.30 and 104.00, and resistance is at 104.70, 104.90 and 105.00.