US Dollar Slides Following Mixed Economic Data

The US Dollar (USD) experienced a decline on Friday, driven by a combination of factors including the release of the University of Michigan’s Consumer Sentiment Index figures and softer-than-expected housing market data. Let’s break down the key points:

Consumer Sentiment Index:

The University of Michigan’s Consumer Sentiment Index improved to 67.8 for early August, surpassing market expectations (which were at 66.9). This suggests that consumer confidence remains relatively strong. However, the Current Conditions Index declined from 62.7 to 60.9, indicating some concerns about the present economic situation.

The Consumer Expectations Index rose from 68.8 to 72.1, reflecting optimism about future economic prospects.

Housing Market Data:

Housing Starts in the US declined by 6.8% in July, reaching 1.238 million units. This decline signals a softened housing market. Building Permits also decreased by 4% after a 3.9% rise in June, further contributing to the cautious sentiment.

Market Outlook:

Despite the mixed data, markets remain confident about a potential interest rate cut by the Federal Reserve (Fed) in September. However, the Fed’s decision will depend on incoming data, and there is a risk of overestimating the need for aggressive easing.


Technical Analysis (DXY):

The US Dollar Index (DXY) shows a consolidation trend, with indicators suggesting negative sentiment. The Relative Strength Index (RSI) hovers around 40, and the Moving Average Convergence Divergence (MACD) stabilizes with red bars, indicating subdued price action. Overall, the technical picture remains bearish, and the DXY index trades within the 102.50-103.30 channel.

• Support Levels: 102.40, 102.20, 102.00
• Resistance Levels: 103.00, 103.50, 104.00