The US dollar declines below 104.00 as interest in PCE grows

The DXY exhibits mild daily gains in Friday’s North American session. The Federal Reserve’s measured approach alongside a robust labour market continue to diminish expectations of rate cuts.

The market expects no chance for a March rate cut and less than a 25% chance of a cut in May. Investors keenly await upcoming economic reports for further insights on economic health and implications on the Fed’s stance.

The US Dollar Index is currently seen at 103.885, mildly lower due to the current concerns about the American economy. The current status brings down hope of earlier rate cuts by the Fed, whose officials are delaying any monetary adjustments.

Next week, markets will get January’s Personal Consumption Expenditure (PCE) figures, an important data set on US inflation.

The US economy showcases durable strength as signified by resilient economic activity figures, which may signify a threat to the fight against inflation. Additionally, the robust labor market, marked by lows in jobless claims, further deters prospects for near-term interest rate cuts and, therefore, limiting the dollar’s losses.

Earlier on Friday, the US Dollar traded mildly higher as the markets gear up for next week’s Personal Consumption Expenditure (PCE) figures from January, setting a quiet tone for Friday’s session.

Market expectations indicate a decreased likelihood of a rate cut in the near term as indicated by the CME FedWatch Too with low odds of easing in March or May. A strong US domestic economy and resilient labor market contribute to maintaining the Fed’s current stance, delaying the easing to June.

Technically; the indicators on the daily chart reflect mixed sentiment with both buying and selling forces battling for dominance. On one hand, the Relative Strength Index (RSI), although flat, is stationed in positive territory, hinting toward underlying bullish strength.