US Dollar trades flat following Durable Goods data

• The DXY Index is trading neutrally around the 103.80 level with minor day-to-day changes.
• Durable Goods and Confidence data from the US came in weaker than expected.
• The Federal Reserve maintains a hawkish stance as reflected in its reluctance to slash rates, which may limit the downside.

The US Dollar Index (DXY) is currently trading neutrally near the 103.80 mark. The Federal Reserve (Fed) has illustrated its wariness to hastily reduce rates, which has led to a diminished possibility of such cuts in March, while odds in May have decreased to approximately 20%. On the data front, weak mid-tier data reported during the European session is pushing the Greenback down.

If the United States economy continues to show weakness, markets may readjust their expectations, but as for now, the most likely scenario is that the Fed will start cutting in June, which seems to provide support to the USD. Personal Consumption Expenditures (PCE) figures from January and Gross Domestic Product (GDP) revisions from Q4 may change those bets.

Daily digest market movers: US Dollar offers weak profile as US economy starts showing some cracks

• The Conference Board's Consumer Confidence Index for February dropped lower than anticipated with a 106.7 print against the expected 115.
• US Durable Goods Orders plunged by 6.1% in January, far more than the 4.5% decline expected.
• As per the CME FedWatch Tool, the Federal Reserve's unwillingness to cut rates prematurely has shifted market sentiment. Reduction odds for March have dropped to zero, with May's likelihood of a cut down to 20%. As for now, the most likely scenario is that the easing starts in June.
• In case PCE and GDP data come in softer than expected, those odds may change in favor of dovish rhetoric that weighs on the US Dollar.

Technical analysis: DXY bears hold steady below 20-day SMA

The technical situation, as indicated by the daily chart, shows buying momentum gradually waning. This is seen by the Relative Strength Index (RSI) remaining tepid in negative territory, suggesting the possible emergence of selling pressure. Adding to this narrative, the appearance of rising red bars in the Moving Average Convergence Divergence (MACD), an indicator of downward momentum, further attests to this perspective. 

However, the index standing with regard to the Simple Moving Averages (SMAs) presents a somewhat mixed picture. The DXY remains below both the 20 and 100-day SMAs, indicating a possible bearish bias for the short term, but its position above the 200-day SMA may imply underlying bullish strength. 

Furthermore, the evidence of bears gaining ground could amplify the selling pressure. Therefore, in the short term, it could be suggested that the selling momentum is currently dominating. This, however, does not entirely overshadow the overall trend, which still showcases a certain degree of bullish resilience in the DXY.