US Dollar rises after UoM data

• US Dollar rises after UoM positive data.
• Consumer confidence improves, inflation expectations were mixed.
• FOMC cuts rates by 25 bps, economic growth remains solid.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, rose on Friday. This comes after positive University of Michigan data and the announcement that the Federal Open Market Committee (FOMC) lowered interest rates by 25 basis points on Thursday.

The Fed expressed optimism about economic growth but acknowledged easing labor market conditions. Despite the rate reduction, DXY has rebounded and could continue its upward momentum if the data continues coming in strong.

Daily digest market movers: US Dollar rises on Michigan sentiment data, FOMC decision

• The FOMC concluded its two-day meeting with an expected 25 bps rate cut, signaling continued easing amid concerns over global economic growth.
• Despite weak jobs data, other indicators suggest the US economy remains robust, with solid labor market conditions and growth forecasts above trend.
• The Atlanta Fed's GDPNow model estimates Q4 GDP growth at 2.4%, while the New York Fed's Nowcast model tracks it at 2.0%.
• Rising productivity is expected to support low inflationary economic growth, leading to higher real interest rates and currency appreciation in the long term.
• Consumer confidence improved in November with the University of Michigan's Consumer Sentiment Index rising to 73 from 70.5 in October.
• The Current Conditions Index declined slightly to 64.4, while the Consumer Expectations Index climbed to 78.5.
• Inflation expectations remained low, with the one-year outlook edging down to 2.6% and the five-year outlook rising to 3.1%.

DXY technical outlook:  DXY maintains bullish momentum, resistance at 105.50

The DXY index's indicators retracted slightly on Thursday but maintained positive momentum by the end of the week. The Relative Strength Index (RSI) stands deep in positive territory, while the Moving Average Convergence Divergence (MACD) prints lower red bars. 

The DXY has regained support at its 200-day SMA and completed a bullish crossover between the 200-day and 20-day SMAs. This suggests potential for further upward price action despite a recent pullback this week.