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US Dollar Falters on Weak PMI Data, Focus Shifts to GDP and PCE

The US Dollar Index (DXY) trades lower on Tuesday following disappointing S&P PMI figures, signaling a slowdown in economic activity. However, the Fed’s persistent hawkish stance continues to support the USD, limiting potential losses.

Key Factors:

  • Disappointing PMIs: Below-expectation US Manufacturing and Services PMI figures raise concerns about economic momentum and weigh on the USD.
  • Hawkish Fed Outlook: The Fed’s consistent messaging on maintaining higher interest rates provides some underlying support for the USD.
  • Crucial Economic Data: This week’s Q1 GDP and March PCE Price Index releases will be closely watched, influencing market expectations regarding the Fed’s rate trajectory.

Technical Analysis: Mixed Signals, Bullish Bias Persists

  • Weakening Momentum: The RSI slopes downwards, and the MACD shows decreasing green bars, suggesting a loss of bullish momentum.
  • Underlying Support: The DXY remains above key SMAs (20, 100, and 200-day), indicating a prevailing bullish bias in the medium to long term.