US Dollar ticks higher after weak consumer sentiment offsets broader data disappointment

• University of Michigan consumer sentiment falls to 50.8, a fresh 2025 low.
• Inflation expectations rise, with 1-year forecast jumping to 7.3%.
• DXY edges toward 101.00 amid Fed easing expectations and tariff uncertainty.
• Market sees first rate cut in September, with more expected through 2026.
  

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is trading slightly higher at around 101.00 on Friday after a softer-than-expected University of Michigan Consumer Sentiment survey added to a week of mixed US economic data. Household confidence dropped, while inflation expectations surged, painting a murky outlook for the US economy. US President Trump's unpredictable tariff plans and vague trade policy continue to weigh on sentiment. Still, the DXY is holding onto weekly gains, as traders digest fading risk appetite and brace for further Federal Reserve (Fed) signals.

Daily digest market movers: Not much market moving

• US consumer sentiment declined to 50.8 in May, down from 52.2 in April, missing expectations and marking the lowest reading since June 2022.
• The Current Conditions gauge eased to 57.6 from 59.8, while Consumer Expectations fell to 46.5 from 47.3.
• Inflation expectations moved higher: 1-year rose to 7.3% from 6.5%, and 5-year to 4.6% from 4.4%, signaling heightened price concern.
• Thursday's US data showed April PPI declined unexpectedly and Retail Sales rose only 0.1% after March's upward revision to 1.5%.
• President Trump announced that the US will soon set unilateral tariffs on many countries, raising concerns about future trade flows.
• Market pricing suggests a 51.1% chance of a rate cut by September and sees multiple cuts through 2026, with no hikes expected.
  

US Dollar Index technical analysis: Going nowhere

The US Dollar Index is trading near 101.00 with gains, near the top of its intraday range between 100.52 and 101.14. The Relative Strength Index (RSI) remains in the 50s, suggesting neutral momentum. The Moving Average Convergence Divergence (MACD) points to a mild bullish crossover, while the Average Directional Index (14) in the 30s indicates weak trend strength. The Ultimate Oscillator trades in the 60s, and Bull Bear Power hovers near zero, reinforcing the indecisive tone. The 20-day SMA provides a short-term buy signal, but the 100-day and 200-day SMAs continue to flash bearish. Support levels are seen at 100.93, 100.67, and 100.61, while resistance is at 101.16, 101.75, and 101.82. Overall, the DXY presents a neutral outlook with a slight upward bias.