US Dollar softens after mixed data, dovish Fed comments

• US Dollar Index retreats to 106.50 and continues hitting a barrier near 107.00.
• Dollar weakens on Fed's Williams hinting at inflation cooling and rate reduction.
• Fed officials remain cautious amid persistent inflation concerns and uncertainty about future rate decisions.
• Mid-tier data from the US came in mixed on Thursday.

In Thursday's session, the US Dollar Index (DXY) flattens after Fed's Williams indicated a potential cooling of inflation and a subsequent decline in interest rates. On the data front, the data for Jobless Claims came in below expectations, while Manufacturing data raised concerns among investors. The DXY hovers around 106.50, indicating a possible move to find support for a rebound.

The DXY maintains an overall bullish momentum, supported by strong economic data and a less dovish Federal Reserve (Fed) stance. Its upward trajectory is driven by hawkish rhetoric, risk-off sentiment and geopolitical tensions. The uptrend is intact with limited expectations of aggressive Fed easing. 

Daily digest market movers: US soft as markets digest Fed words, mixed data

• Fed's Williams hinted at potential inflation cooldown and interest rate reduction, leading to DXY's flattening.
• Jobless Claims data fell below expectations, while Manufacturing data raised investor concerns.
• Initial Jobless Claims for the week ending November 15 decreased to 213,000, below expectations.
• Continuing claims unexpectedly surged to 1.908 million, rising by 36,000 from the previous week.
• Philadelphia Fed Manufacturing Survey plummeted to -5.5 in November, slipping into contraction from positive territory.
• According to the CME FedWatch Tool, markets now assign a 55.5% probability of a 25 bps rate cut by the Fed in December, down from 70% a week ago.
• The US 10-year benchmark yield declined to 4.39%, moving further away from its recent high of 4.50%.

DXY technical outlook: Bulls face resistance near 107.00 as indicators show potential consolidation

Technical indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), remain positive but have flattened, suggesting consolidation due to near overbought conditions. Index holds above its 20, 100 and 200-day Simple Moving Averages (SMA), and this should provide support to the bullish rhetoric. For the short-term, bulls must hold the 106.00 level.