US Dollar dips after mixed US data fails to lift sentiment

• DXY retreats to 100.80 after Retail Sales, PPI and jobless claims show limited surprises.
• Fed's Powell signals potential changes to long-term framework, maintaining cautious inflation stance.
• Currency markets watch for volatility amid US-Asia policy talks and geopolitical tensions.
• Market pricing tilts toward rate cuts by September as inflation pressures ease.
  
  

The US Dollar Index (DXY), which tracks the Greenback against a basket of major currencies, is trading just under 101.00 on Thursday after key US economic data releases offered little upside momentum. Retail Sales rose a modest 0.1% in April, while the Producer Price Index softened to 2.4% annually, below expectations. Weekly jobless claims held steady at 229K. 

Speaking at the Thomas Laubach Research Conference, Federal Reserve (Fed) Chair Jerome Powell reiterated the need to revisit the Fed's strategic language around inflation and employment. The market reaction was muted, with traders shifting focus toward possible currency interventions in Asia and the deteriorating tone in Russia-Ukraine negotiations.

Daily digest market movers: Going nowhere

• US Retail Sales rose by 0.1% in April, beating expectations of flat growth, but failed to shift market sentiment.
• Producer Price Index came in softer at 2.4% year-over-year, with core PPI slowing to 3.1%, supporting a dovish policy lean.
• Jobless claims held steady at 229K, showing no signs of new labor market stress, while continuing claims rose modestly.
• Fed Chair Powell flagged upcoming changes to Fed communications and emphasized the need to handle future supply shocks better.
• Markets are digesting Powell's comment that April PCE is likely around 2.2%, with inflation overshoots no longer relevant.
• Traders closely monitor South Korea and Asian FX volatility amid rumors of potential US-led efforts to weaken the Greenback.
• Currency market caution persists as Russia-Ukraine talks stall and US President Trump pushes for a high-level meeting with Putin.
• DXY lacks traction despite Powell's remarks, slipping to 100.80 and reversing Wednesday's bounce.
• Market pricing reflects rising expectations for a Fed rate cut by September, narrowing yield spreads and dampening USD demand.
• The overall tone remains indecisive, with DXY range-bound and geopolitical headlines clouding direction.
  

US Dollar Index Technical Analysis: Stuck between two forces

The US Dollar Index (DXY) shows indecisiveness as it trades around 101.00, reversing modest gains from the prior session. Price action is confined within a tight band between 100.59 and 101.05. The Relative Strength Index (RSI) hovers in the 50s, and the Moving Average Convergence Divergence (MACD) indicates mild buy momentum, though Momentum (10) reads around 1.0, reflecting limited upward pressure. The Stochastic RSI Fast in the 70s and Awesome Oscillator near 0 suggest a neutral to slightly bullish bias. However, the broader outlook remains bearish, with the 100-day and 200-day SMAs and several EMAs in the 100s signaling selling pressure. Immediate support lies at 100.62, 100.59, and 100.56, while resistance is seen at 100.92, 101.34, and 101.81. A clear breakout above 101.90 or a drop below 100.22 could define the next directional move.