US Dollar retreats after GDP, PCE data meets forecast

• The US Dollar Index plunged toward 106.00 on Wednesday.
• The US Dollar ticked lower, but its losses may be limited as markets are pricing in a more hawkish Fed.
• PCE data from October met expectations for inflation.

In Wednesday's session, the US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, ticked 1% lower as markets assess the release of high-tier economic data including a Personal Consumption Expenditures (PCE) reading, the Federal Reserve's (Fed) preferred gauge of inflation.

Daily digest market movers: US Dollar retreats despite sticky inflation data

• Despite US data indicating rising inflation, the DXY remains on the back foot.
• The market is pricing in a more hawkish stance from the Fed, which could lead to less cuts in the near term.
• This hawkish stance is likely contributing to the recent strength of the US Dollar against other currencies.
• Data is showing that the economy keeps doing well with no recession in view.
• The Q3 Gross Domestic Product (GDP) was reported at  2.8% as expected.
• Initial Jobless Claims improved to 213K, better than the expected 217K.
• Durable Goods Orders rose by 0.2% in October, lower than the expected 0.5% but higher than September's -0.4%.
• The PCE Price Index rose by 0.2% MoM and 2.3% YoY as expected. The core PCE annual figure increased by 2.8% YoY, meeting forecasts as well.

DXY technical outlook: Indicators suggest potential consolidation, but uptrend intact

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators had been struggling to gain ground lately, and they seemed to have given up on Wednesday as the index retreats to 106.00. 

This suggests that the index may be due for a period of consolidation. However, the index remains about its 20,100 and 200-day Simple Moving Averages (SMA),  which indicates that the overall momentum remains positive. The DXY is expected to find support at 106.00-106.50 and faces resistance at 108.00.