US Dollar trades with mild gains following mid-tier reports

• Durable Goods orders from February came in better than expected.
• Housing data showed some signs of weakness.
• PCE figures from February to be released on Friday will be the week’s highlight.

The US Dollar Index (DXY) is hovering around 104.20, trading with mild gains against its rivals on Tuesday. After Durable Goods and Housing market data, the USD remains stable as markets await fresh drivers to continue placing their bets on the next Federal Reserve (Fed) decisions.

The US economy is on a delicate path with inflation remaining sticky and economic activity showing some weakness. Jerome Powell confirmed the bank's persistence in not overreacting to hot inflation figures from the start of the year while the bank didn't change its interest rate projections from 2024. The start of easing is still seen starting in June, but incoming data will continue dictating the timing. 

Daily digest market movers: DXY mildly up ahead of PCE figures, markets digest mid-tier reports

• The economic report by S&P Dow Jones Indices showed that the S&P/Case-Shiller Home Price fell by 6.6% on a yearly basis in January, slightly lower than expected.
• The House Price Index reported by the Federal Housing Finance Agency (FHFA) in January saw a slight dip of 0.1% in the same month.
• The US Census Bureau reported that Durable Goods Orders increased by 1.4% MoM in February, outperforming the consensus of 1.1% and showing a significant improvement from the previous drop of 6.9%.
• The headline Personal Consumption Expenditures (PCE) is expected to have risen by 2.5% YoY, while the core measure is seen coming in at 2.8%. The outcome of the Fed’s preferred gauge of inflation will dictate the pace of the USD for the short term.

DXY technical analysis: DXY bullish momentum softens, outlook still bright

On the daily chart, the Relative Strength Index (RSI) paints a picture of flat momentum, suggesting a tie between buying and selling pressure. Simultaneously, the Moving Average Convergence Divergence (MACD) offers a flat trajectory with green bars, indicating a stagnation in buying power, which might be a sign of bulls taking a breather.

Despite the short-term sluggishness, the scene over a wider time horizon appears encouraging. The DXY is well-positioned above the 20, 100, and 200-day Simple Moving Averages (SMAs), a strong sign of the bulls' sizable control and an overall bullish tendency.

To add more context, the market is coming off a successful 1% winning week, which could explain the current pause in upward momentum. Traders could use this breather to re-assess the market and potentially find new entries for a continued bull trend.