US Dollar up as recession fears ease after strong Retail Sales figures

• USD steadies amidst mixed market reactions and fresh data releases.
• Retail Sales from July came in strong as well as weekly Jobless Claims.
• Markets continue confident outlook about a September cut by the Fed.

The US Dollar (USD), measured by the US Dollar Index (DXY), consolidated and rose toward the 102.90 level during Thursday’s trading session. This was influenced by strong data reported by the US, but steady dovish bets continue to limit the USD upside.

The US economy is persisting above the trend, suggesting that the market may once again be leaning too heavily into firm easing.

Daily digest market movers: USD steadies as Retail Sales and Jobless Claims beat expectations

• Retail Sales rose 1% MoM to $709.7 billion in July, according to the US Census Bureau. This figure surpassed the expected 0.3% increase and compensated for the 0.2% dip in June.
• Retail Sales ex Autos also rose noticeably by 0.4%, beating the expected 0.1%.
• In addition, Initial Jobless Claims for the week ending August 10 came in at 227K, better than the expected 235K and down from the previous week’s revised figure of 234K.
• According to the CME FedWatch Tool, odds now point to an 80% chance of a rate cut in September, and markets remain overconfident of 200 bps of easing in the next 12 months though that will depend on incoming data.

DXY technical outlook: Bias remains bearish but showing signs of stabilization

DXY’s technical outlook remains bearish, despite some indications of stabilization. The index is positioned below the 20, 100 and 200-day Simple Moving Averages (SMAs), confirming the established bearish bias. Momentum-based indicators such as the Relative Strength Index (RSI) is now hovering around 40, showing signs of stability despite persisting selling pressure.

The Moving Average Convergence Divergence (MACD) also demonstrates red bars that have stabilized deep in the negative region. Though there is a notable shift in momentum, the overall technical narrative does not project a significant bullish rebound just yet.

Support Levels: 102.40, 102.20, 102.00 Resistance Levels: 103.00, 103.50, 104.00