US Dollar Holds Recovery Amid Upbeat Economic Data, Diminishing Recession Fears
The US Dollar (USD) is slightly lower in Friday’s European session but maintains its recent recovery following Thursday’s positive US data. The US Dollar Index (DXY) is hovering near 103.00 after bouncing back from a 10-day low of 102.27.
Robust US Retail Sales growth and lower weekly Jobless Claims have helped ease concerns about a potential recession in the US. Retail Sales rose by 1% in July, exceeding expectations and signaling strong consumer spending. Additionally, Initial Jobless Claims came in lower than anticipated, indicating a healthier labor market.
Market participants have scaled back expectations of a 50 basis point interest-rate cut by the Federal Reserve in September. The likelihood of a larger rate cut has decreased to 29.5%, down from 51% a week ago.
Analysis and Outlook:
The US Dollar’s recovery is supported by positive economic data, which has alleviated concerns about a US recession. The likelihood of a 50-bps interest-rate cut by the Fed has decreased, indicating a more measured approach to monetary policy. Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium will provide further insights into the Fed’s rate cut path. From a technical perspective, the US Dollar remains below the 20-day EMA, suggesting a bearish trend in the near term. Key support levels for the Greenback are at 102.35 and 102.00, while resistance levels are at 103.54 and 104.00. Overall, the US Dollar’s performance is closely tied to economic data and Fed policy decisions, impacting global financial markets and individual investors alike.