US Dollar steady despite soft Durable Goods data

• US Dollar holds its ground at the end of the week, remains in consolidation mode.
• Fed officials remain cautious on inflation, as Durable Goods Orders miss market expectations.
• Markets continue to see two cuts by year-end.

The US economy remains robust with GDPNow tracking third-quarter growth at 3.4%. The strong economic outlook might push the Federal Reserve (Fed) to adopt a more cautious stance. Investors, meanwhile, are confident of two cuts by the end of 2024.

The US economy remains robust with the Atlanta Fed's GDPNow model tracking Q3 growth at 3.4% and the New York Fed's Nowcast model projecting 3.0% growth for Q3 and 2.6% growth for Q4.

Daily digest market movers: US Dollar with gains, while Goods Orders fall below estimates

• Durable Goods Orders in the US declined by 0.8% MoM in September, slightly better than market expectations of a 1% decline.
• Excluding Transportation, New Orders increased by 0.4%. Excluding Defense, New Orders decreased by 1.1%.
• Transportation equipment, which has been declining for three of the last four months, contributed to the overall decrease in Durable Goods Orders.
• On the positive side, the Michigan Consumer Sentiment index rose to 70.5, beating expectations and helping the USD avoid losses.

DXY technical outlook: DXY breached 200-day SMA, now consolidating

The DXY index breached the 200-day SMA this week, but over-extension forced a retreat. The index is now expected to consolidate, correcting overbought conditions.

Despite gains by the end of the week, the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators remain dangerously close to the overbought territory, so traders should consider eventual losses for the index. Supports lie at 104.50, 104.30 and 104.00, while resistances stand at 104.70, 104.90 and 105.00.