The US Dollar (USD) showed resilience and consolidation as it rose towards the 102.90 level in Thursday’s trading session, driven by positive data releases. However, dovish sentiments continue to cap the USD’s upside potential.
Despite the robust performance of the US economy, there are concerns that the market may be too optimistic about potential rate cuts by the Federal Reserve.
Market Update: USD Strengthens on Retail Sales and Jobless Claims Beat
- Retail Sales in July surged by 1% to $709.7 billion, surpassing expectations and offsetting the previous month’s decline.
- Excluding autos, Retail Sales also saw a significant increase of 0.4%, exceeding forecasts.
- Weekly Jobless Claims for the week ending August 10 came in at 227K, lower than expected and indicating a strong labor market.
- The CME FedWatch Tool now suggests an 80% probability of a rate cut in September, with markets anticipating further easing measures in the coming months.
DXY Technical Analysis: Bearish Bias Persists with Signs of Stabilization
While the DXY index remains bearish, there are indications of stabilization in the market. The index is currently below key moving averages, signaling a bearish trend. However, momentum indicators like RSI and MACD are showing signs of stability despite selling pressure.
Support Levels: 102.40, 102.20, 102.00 | Resistance Levels: 103.00, 103.50, 104.00
Inflation FAQs: Understanding the Impact on Currency and Investments
- Inflation measures the rise in prices of goods and services, impacting central bank policies and currency values.
- Core inflation excludes volatile elements like food and fuel, focusing on stable price trends.
- Higher inflation can lead to higher interest rates, attracting foreign investments and strengthening a currency.
- Gold, traditionally a hedge against inflation, may be influenced by interest rate changes in response to inflation levels.
By staying informed about key economic indicators like inflation and market movements, investors can make more informed decisions about their finances and potential investment opportunities.