The US Dollar (USD) observed modest losses on Wednesday, trailing at 102.4 in the US Dollar Index, as market participants stick to the sidelines awaiting drivers. The trading floors were relatively quiet with no significant reports fuelling reactions during the session. The focus is set on the release of the US Consumer Price Index (CPI) from December, due on Thursday. For now, markets are betting on five rate cuts in 2024, largely dismissing the Federal Reserve (Fed) forecast of only 75 bps of easing. Strong labor market data from the US economy was largely offset by a weak US ISM PMI print, so December’s CPI reading will play a big role in shaping expectations of the central bank’s easing calendar.
The indicators on the daily chart reflect a decrease in buying momentum and an increase in selling pressure. The Relative Strength Index (RSI), which is on a negative slope and in negative territory, suggests that bears are around the corner. In addition, a decreasing histogram of green bars in the Moving Average Convergence Divergence (MACD) indicator confirms the growing bearish sentiment, indicative of a decrease in bullish momentum. Despite bulls taking a breather, they still are struggling to make a decisive upward move. This lack of bullish momentum is also confirmed by the position of the index in relation to the Simple Moving Averages (SMAs). While it remains above the 20-day SMA, it is under the broader 100 and 200-day SMAs, suggesting bears are maintaining a bullish grip on the larger time horizon. Support levels: 102.30, 102.00 (20-day SMA), 101.80. Resistance levels: 102.70, 102.90, 103.00.