US Dollar gives up ground after disapointing PPI figures

DXY index slips below 103.00 as US Producer Price Index figures disappoint.
US economic growth continues to trend upwards, suggesting markets may be overestimating aggressive easing requirements.
CPI is now in focus for a clearer inflation outlook.

On Tuesday, the US Dollar (USD), measured by the US Dollar Index (DXY), showed a mild decline falling under the 103.00 level. This drop followed disappointing Producer Price Index (PPI) figures, which fell short of analysts’ estimates.

Based on the entire economic data, the US economy continues to achieve growth above the trend. This suggests that market participants may be overestimating the need for aggressive monetary easing as the Federal Reserve (Fed) may request more data before cutting.

Daily digest market movers: Mild decline follows underwhelming PPI figures

The release of the Producer Price Index (PPI) for final demand in the US showed a YoY rise of 2.2% in July, less than the market expectation of 2.3%.
The annually adjusted core PPI also rose by 2.4%, missing analysts’ estimated increase of 2.7%.
On a monthly scale, the PPI saw a 0.1% rise, while the core PPI remained unmoved.
As for now, A 50-basis-point cut is possible but will entirely depend on the data, with current odds at around 55%. The market is still fully expecting 100 basis points of easing by the end of the year and a total of 175-200 basis points of trimming over the next 12 months.
This rate path seems improbable unless the US economy enters a severe recession.

DXY technical outlook: Bearish trends continue amid weak buying efforts

There is no significant change in the technical outlook for DXY, bearing in mind the moderate selling pressure. The momentum-based Relative Strength Index (RSI) is stable below the 50 mark, indicative of a sustained selling approach. The Moving Average Convergence Divergence (MACD) continues to graph negative values as the red bars level off, demonstrating continued bearish activity despite flat market movement on Tuesday.

The Index position rests beneath the 20, 100 and 200-day Simple Moving Averages (SMAs), pointing to a predominantly bearish trend.

Support Levels: 102.80, 102.50, 102.20

Resistance Levels: 103.00,103.50, 104.00