The US Dollar has observed a significant fall recently, reaching its lowest value since March. This decline can be attributed to the Federal Reserve’s bets leaning in favor of a dovish stance. The market sentiment towards the Federal Reserve’s monetary policy has been on the dovish side, which has put downward pressure on the USD. The Federal Reserve officials are showing hesitancy in rushing to rate cuts, but the possibility of a cut in July and September is on the table.
Impact of Strong Housing Data
Despite the release of strong housing data, the US Dollar failed to gain momentum. The housing data showed an improvement in Housing Starts and Building Permits, indicating a positive trend in the real estate sector. However, this positive data was overshadowed by the dovish bets on the Federal Reserve and lower US Treasury Yields. The market’s confidence in a potential rate cut in September has further contributed to the decline of the USD.
Technical Outlook and Support Levels
The DXY index, which measures the US Dollar against a basket of major currencies, is struggling to regain the 104.00 area. While the daily indicators like Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest a near-oversold condition, there could be a slight correction in the future. Strong support levels for the USD are seen at 103.50 and 103.00. However, the overall technical outlook remains bearish, indicating more downside potential for the US Dollar.
The recent decline in the US Dollar can be attributed to the dovish bets on the Federal Reserve and the market’s anticipation of a potential rate cut. Despite the positive housing data, the USD failed to gain momentum, reflecting the impact of external factors on the currency’s performance. The technical outlook for the US Dollar remains bearish, suggesting that further downside movement is possible in the near term. Traders and investors should closely monitor the Federal Reserve’s actions and market sentiment to assess the future direction of the US Dollar.