- US Dollar falls on profit-taking after a solid week.
- Flash US PMI signaled solid business activity in October.
- Two more Fed rate cuts in 2024 remain on the table, markets await further data to validate it.
The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, retreated on Thursday, giving up some of the gains accumulated during a solid week marked by a stellar performance. This pullback is attributed to profit-taking following the release of mixed US economic data. Despite positive signals from the flash US S&P PMI, suggesting robust business activity, the Greenback saw losses and is set to consolidate in the next session.
Daily digest market movers: US Dollar declines on profit-taking, S&P PMIs show promising results
- The flash US S&P Global October Composite PMI came in at 54.3, slightly above estimates, with services expanding at 55.3 and manufacturing contracting for the third straight month.
- Despite the overall PMI improvement, employment in the US fell slightly for the third month, reflecting uncertainty ahead of the upcoming presidential election.
- The CME Fedwatch Tool indicates a 90% probability of a 25-basis-point rate cut at the November 7 Fed meeting.
- In the meantime, the US 10-year benchmark remains below the peak reached on Wednesday near 4.20%.
DXY technical outlook: DXY faces resistance, poised for consolidation
The DXY index surged above its 200-day SMA, but buying momentum waned, signaling overextension. The index is poised for sideways consolidation to alleviate overbought conditions per the Relative Strength Index (RSI).
Key support levels include 104.50, 104.30 and 104.00, while resistance lies at 104.70, 104.90 and 105.00.
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