US Dollar finds footing with mild gains following GDP and labor market data

• US Q1 GDP reveals reduced expansion at 1.6% YoY.
• On the positive side, weekly Jobless Claims come in strong.
• Friday's PCE data from March will dictate the pace of DXY in the short term.

The US Dollar Index (DXY) is seen trading mildly down at 105.75 on Thursday and struggling to gain more ground following its extended rally in April. The Index weakened following Gross Domestic Product (GDP) data from Q1, but losses may be limited after strong labor market data was reported during the European session.

The US economy remains resilient but is expected to grow at a slower pace due to inflation and higher interest rates. The Federal Reserve (Fed) remains firm on its stance and seems to not want to rush to start easing and market hawkish adjustments provide a cushion to the USD. Personal Consumption Expenditures (PCE) data from March will likely affect those investors' expectations.

Daily digest market movers: DXY down after GDP data

• The Bureau of Economic Analysis's (BEA) initial estimate revealed a 1.6% YoY annualized expansion in the US Gross Domestic Product (GDP) for January-March.
• GDP figures were below market predictions of a 2.5% annual rise, lagging behind 3.4% YoY growth in Q4 2023.
• The US Department of Labor showed a decrease of 5K in Initial Jobless Claims for the week ending April 20, resulting in a total of 207K Initial Jobless Claims.
• The weekly decline in Initial Jobless Claims surpassed market forecasts, which projected 214K claims, a clear improvement from the prior week's total of 212K.
• Regarding expectations on the Fed, markets bet on 20% odds of a June rate cut. A potential Fed rate cut in July or even September isn't fully assumed either, pointing to strong confidence in ongoing US economic performance that justifies the delay of the easing cycle.

DXY technical analysis: DXY shifts into neutral gear, bears lurk despite bullish undertones

The indicators on the daily chart portray a mixed stance for the DXY. The flat position of the Relative Strength Index (RSI) in positive territory resonates with stagnant buying momentum. Moreover, the decreasing green bars of the Moving Average Convergence Divergence (MACD) reflect a fading bullish sentiment, signaling potential weakness in the near future.