USD dives post easing GDP growth

Dollar Dips as Tariff Buzz Fades and GDP Glow Dims
The US Dollar Index, a key measure of the dollar’s strength against a basket of global currencies, is hovering near the 104.40 mark after surrendering early gains on Thursday. The greenback kicked off the day with a boost from a surprise announcement of a 25% tariff on all auto imports, set to take effect April 3, paired with robust fourth-quarter GDP figures that clocked in at an annualized 2.4%, edging past forecasts. Yet, the initial excitement fizzled as traders grappled with mixed momentum signals and a lack of sustained market momentum, leaving the dollar drifting lower.

Economic data painted a complex picture. The upward GDP revision, driven by solid consumer and government spending, was tempered by declines in imports and investment. Meanwhile, the labor market showed resilience, with continuing jobless claims dropping by 25,000 to 1.856 million and the four-week moving average of insured unemployment sliding to 224,000—hints of a stubbornly tight jobs landscape. However, the tariff news, including threats aimed at Canada and the European Union, failed to ignite lasting enthusiasm. US Treasury yields put in a mixed showing, further cooling dollar bulls. All eyes are now turning to the upcoming Personal Consumption Expenditures report, the Federal Reserve’s go-to inflation metric, for the next market cue.

From a technical standpoint, the dollar’s outlook remains shaky. After flirting with gains, the index retreated to oscillate between 104.07 and 104.65. While the Moving Average Convergence Divergence indicator flashes a buy signal, the broader trend leans bearish, with the 20, 100, and 200-day Simple Moving Averages all sloping downward. Overbought warnings from the Relative Strength Index and stochastic oscillator clash with tepid readings from the Momentum and Awesome Oscillator indicators, suggesting capped upside. With the Average Directional Index hovering near 29.777, trend strength looks neutral. Resistance looms at 104.296, 104.536, and 104.616, while support sits at 104.175 and 103.923, setting the stage for a tense tug-of-war in the sessions ahead.