US Dollar declines as market awaits Fed signals

• US Dollar weakens on Friday due to profit-taking.
• Fed speakers set to comment on monetary policy on Friday, which might set the late session's pace.
• US housing data shows a decline in Building Permits and Housing Starts.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is declining on Friday as profit-taking sets in following a strong rally earlier in the month. The US Dollar retreat comes ahead of a series of speeches by Fed officials on Friday, which could provide further insight into the central bank's monetary policy stance. Additionally, US housing data released on Friday morning showed a decrease in Building Permits and Housing Starts, indicating a potential slowdown in the housing market.

Despite a period of deceleration, the economy has demonstrated signs of strength, and the Federal Reserve (Fed) has indicated that its approach to monetary policy will be guided by the evolving economic data.

Daily digest market movers: US Dollar declines on profit-taking, eyes on Fed speakers

• On the data front, US Building Permits dropped to 1.428 million, down from 1.47 million in August, while Housing Starts decreased to 1.354 million compared to 1.61 million previously.
• Three Fed members, Raphael Bostic, Neel Kashkari and Christopher Waller, are scheduled to give speeches. Investors will look for clues on the Fed's evolving monetary policy, though the market largely expects two 25 bps cuts in November and December.
• Swap futures suggests that the markets are seeing two cuts by the Fed for the rest of 2024. The US 10-year benchmark rate stabilized near 4.10%.

DXY technical outlook: DXY consolidates, faces resistance at 200-day SMA

The DXY index faced resistance at the 200-day SMA, leading to a period of consolidation. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have flattened in positive territory, indicating neutral momentum. As expected, the DXY might enter into a correction period after a furious rally, which took the index from 100.30 to near 104.00.

Supports are located at 103.50, 103.30 and 103.00, while resistances lie at 103.80, 104.00 and 104.30.