US Dollar advances despite lower GDP revisions

• DXY index is showing gains, currently standing at 103.90, after hitting a high of 104.20.
• The second estimate of Q4 US GDP came in at 3.2%, lower than expected.
• Expectations of the Fed delaying cuts favor the Greenback.

The US Dollar Index (DXY) is trading around 104.00, experiencing its first significant rise since mid-February after hitting 104.20 earlier in the session. This increase can largely be attributed to a decline in foreign currencies in response to a dovish hold by the Reserve Bank of New Zealand (RBNZ), which seems to be overshadowing soft Q4 Gross Domestic Product (GDP) revisions from the US.

Meanwhile, the US Federal Reserve (Fed) maintains a notably consistent, reluctant stance on cutting rates prematurely, signaling a hawkish bias via its officials. Market sensitivity to this stance has reduced expectations of an imminent rate cut, with odds for March at zero, May at 20%, and June around 50%. This seems to be providing a cushion for the Greenback. 

Daily digest market movers: US Dollar gains as markets push back rate cut outlook

• The US reported that the GDP annualized growth rate was revised down to 3.2%, slightly below the consensus of 3.3%.
• To continue placing bets on the next Fed decisions, market participants are now awaiting the release of the Personal Consumption Expenditures (PCE) Price Index due on Thursday.
• Market expectations for the Fed's decisive actions have converged. The market now anticipates only 75 bps of total easing in 2024, down from 150 bps at the start of the year, and this aligns with the Fed’s rate projections. 

Technical analysis: DXY bulls gain some ground, but must conquer 20-day SMA

On the daily chart, the Relative Strength Index (RSI) shows a positive slope in positive territory, indicating buyers have started gaining momentum. Nonetheless, bulls  struggle to capture further ground, suggesting a possible exhaustion in their momentum.

The Moving Average Convergence Divergence (MACD) reflects a set of decreasing red bars. This tells us that, despite the buyer's force in the market, there is a palpable selling pressure visible. Looking at the Simple Moving Averages (SMAs), the index is beneath the 20-day and 100-day SMAs, affirming the short-term bearish outlook. Conversely, its position above the 200-day SMA implies that bulls are maintaining their strength in the grander time frames.

In summary, the current technical indicators suggest a precarious balance between buying and selling forces with a short-term bearish bias, which might be starting to wane. However, the long-term view remains bullish, evidenced by the pair's stance above the 200-day SMA.