US Dollar sees upward momentum stall on mixed Retail Sales

• DXY trades near 106.80 on Tuesday.
• Market focus shifts toward upcoming Fed decision on Wednesday.
• Retail Sales fail to boost US Dollar enthusiasm.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, trades with gains around 106.80 on Tuesday, as upward momentum stalls following November's Retail Sales release. Market focus remains on Wednesday's decision on interest rates by the Federal Reserve (Fed), and a 25 bps cut is already priced in.

Daily digest market movers: US Dollar stuck as markets assess Retail Sales figures

• The two-day Federal Open Market Committee meeting begins on Tuesday as economic fundamentals suggest the Federal Reserve should not cut rates.
• November Retail Sales data slightly exceeded forecasts but failed to spark renewed US Dollar buying, traders weigh the marginal revisions and mixed underlying details.
• Monthly Retail Sales grew by 0.7%, beating the 0.5% estimate, while the previous print got revised up to 0.5% from 0.4%.
• Growth remains solid: The New York Fed's Nowcast model tracks Q4 growth at 1.9% SAAR, while the Atlanta Fed GDPNow stands at 3.3%.
• Markets still anticipate a 25-basis-point rate cut on Wednesday, priced at over 95% probability, even as economic data challenge the need for immediate easing.

DXY technical outlook: Indicators improve, but upside momentum fades

US Dollar indicators recovered significant ground last week, yet the index lacks the strength to retest the 107.00-108.00 zone. On Monday, the index pulled back. Although it trades near 106.30 on Tuesday, the overall picture remains constructive if it can stay above its 20-day Simple Moving Average (SMA).

Persistent growth and upbeat US data may keep the Greenback supported, but caution is warranted until a decisive break above near-term resistance levels is seen.