US Dollar rises as sellers take a breather, political jitters

• US Dollar is gaining strength after Fed decision volatility.
• New York Fed's Nowcast model predicts robust economic growth in third and fourth quarters.
• Fed expects financial conditions to remain loose, supporting economy.

The US economy is experiencing a moderate slowdown, but indicators suggest that economic activity remains robust overall. The Federal Reserve (Fed) has indicated that the pace of its interest rate increases will be determined by economic data.

The upcoming US election will have wide ranging impacts across financial markets, but for now the US Dollar is holding its ground. However, dovish bets on the Fed remain steady and might limit the USD.

Daily digest market movers: US Dollar rises ahead of the weekend on market optimism

• Market optimism is driving the US Dollar higher ahead of the weekend.
• The market is expecting robust growth in Q3, with the New York Fed's Nowcast model tracking Q3 growth at 2.6% SAAR and Q4 growth at 2.2% SAAR.
• Fed is likely pleased that the market is helping to keep financial conditions loose, which should help the economy avoid a hard landing.
• Despite the Fed's efforts to push back against market easing expectations, they have intensified.
• After initially lowering its expectations following the decision, the market is now factoring in an additional 75 basis points of rate cuts by the end of the year.
• Even more unexpected is that the market anticipates close to 250 basis points of further cuts over the next year, which would bring the fed funds rate significantly below the neutral level.

DXY technical outlook: DXY bullish momentum waning, technicals remain bearish

The DXY index has gained some upside momentum, but technical indicators remain bearish.

The Relative Strength Index (RSI) is at 40, near oversold conditions, while the Moving Average Convergence Divergence (MACD) is printing decreasing green bars, implying weak buying pressure.

These indicators suggest that bears are in control and that the index is likely to continue its downtrend.Supports: 100.50, 100.30, and 100.00Resistances: 101.00, 101.30, and 101.60