US Dollar declines further after Retail Sales, labor market data

• The DXY Index recorded losses in Thursday’s session, falling toward 104.40.
• Retail Sales from January declined higher than expected.
• Weekly Initial Jobless Claims came in strong.    

The US Dollar (USD) measured by the Dollar Index (DXY) declined further on Thursday, this time fueled by weak Retail Sales figures from January.

Despite the weak Retail Sales figure, the US economy continues to show signs of being overheated, as seen in the higher-than-expected inflation figures from January that reinforce the case for the Fed delaying rate cuts. On Friday, Producer Price Index (PPI) figures will be closely watched as they may provide additional traction to the USD in case they come in higher than expected.

Daily digest market movers: US Dollar loses ground on weak economic data

• Retail Sales declined -0.8% MoM in January, beating the 0.1% decline expected.
• Industrial Production from the first month of 2024 declined by -0.1% MoM, while markets expected a 0.3% expansion.
• On the bright side, Initial Jobless Claims from the week ending February 9, came in lower than expected at 212K.
• Despite the weak data, markets are still confident about delaying rate cuts by the Federal Reserve (Fed), and as long as investors push the start of easing to June, the USD’s losses are limited.

Technical analysis: DXY will be good as long as buyers hold the 100-day SMA

The technical analysis on the daily chart reflects a negative slope in the Relative Strength Index (RSI), indicating selling momentum in the short term. The Moving Average Convergence Divergence (MACD) shows decreasing green bars, further supporting the concept of selling pressure.

However, despite these short-term negative indicators, the Dollar Index remains above the 20, 100, and 200-day Simple Moving Averages (SMAs), suggesting that the overall trend is still controlled by bulls.