US dollar advances as markets digest PCE data

The US Dollar Index (DXY) is trading near 104.130, up for Thursday’s session, with the Core PCE Price Index matching predictions. Markets continue delaying rate cuts from the Fed, favoring the Greenback.

Personal Consumption Expenditures (PCE) showed no surprises, and the Fed won’t rush to cut rates if there’s no conclusive evidence of inflation coming down.

The markets are aligned with the bank’s forecasts and are expecting 75 bps of easing in 2024, starting in June. The US Bureau of Economic Analysis announced that the inflation rate fell to 2.4% in January from 2.6% in December, and the Core PCE Price Index climbed by 2.8% over the year.

As the US economy doesn’t show conclusive evidence of inflation, markets are pushing the start of easing to June, with the odds of a cut in March and May remaining low. The indicators on the daily chart reflect a positive shift in buying momentum.