US Dollar in multi-month lows amid dovish bets on the Fed

• US Dollar, observed a fall reaching the lowest value since March.
• Federal Reserve bets continue to lean in favour of a dovish stance, consequently impacting the USD.
• Strong Housing data could not prevent this decline.

On Thursday, the US Dollar measured by the DXY index saw an extension in its decline, despite the strong housing data reported during the European session. Factors such as dovish bets on the Federal Reserve and lower US Treasury Yields are responsible for putting downward pressure on the USD.

The outlook for the US economy shows signs of disinflation, and markets are keeping confidence a potential cut in September. The Federal Reserve officials continue to show hesitation rushing to cuts and maintain a data-dependent approach and seem to put a cut in July on the table.

Daily digest market movers: DXY decline, housing data no help for the struggling USD

• Data concerning Housing Starts in June reported an improvement of 3%, amounting to 1.35 million units.
• According to the data unveiled by the US Census Bureau on Tuesday, this figure follows a decrease of 4.6% recorded in May.
• Building Permits showed a surge of 3.4% after a decline of 2.8% in the previous month.
• Thomas Barkin, the Richmond Federal Reserve President, suggested that the discussion at the July policy meeting will likely include whether it is still apt to describe inflation as elevated, as reported by Reuters.
• As per the CME FedWatch Tool, a rate cut in September seems to be priced in which pressured the USD down.

DXY Technical Outlook: DXY’s bearish outlook remains, a minor correction to the upside possible.

Despite the decline, the DXY is grappling to regain the 104.00 area. Even though the daily indicators including Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are far below the 50-mark, pointing towards a near-oversold condition, the DXY could see a slight correction.

Strong supports lie at the 103.50 and 103.00 levels. However, the overall technical outlook remains bearish.