⚡Crypto Alert : Altcoins are up 28% in just last month! Unlock gains and start trading now - Click Here

Navigating US crosswinds

Bullish US Outlook

The latest data presents a positive outlook for the US economy, bolstering confidence in its prospects and potentially strengthening the Dollar Index (DXY). Initial jobless claims decreased to 201,000, signaling a robust labor market, typically indicative of economic growth. Wage growth remained strong, with average hourly earnings up by 0.6%, suggesting consumers may still have purchasing power despite the recent decline in retail sales.


BrokerReviewRegulatorsMin DepositWebsite
🥇Read ReviewASIC, FSA, CBI, BVI, FSCA, FRSA, CySEC, ISA, JFSAUSD 100Visit Broker >>
🥈Read ReviewFMA, FSAUSD 50Visit Broker >>
🥉Read ReviewFSCA, CySEC, DFSA, FSA, CMAUSD 0Visit Broker >>
4Read ReviewSFSA, FSCA, CySec*USD 5Visit Broker >>
5Read ReviewFCA, CySEC, FSCA, SCBUSD 100Visit Broker >>
6Read ReviewFCA, FINMA, FSA, ASICUSD 0Visit Broker >>
7Read ReviewCySEC, FCA, FSA, FSCA, Labuan FSAUSD 100Visit Broker >>
8Read ReviewNot Regulated0.001 BTCVisit Broker >>
9Read ReviewASIC, CySEC, FSCA, CMAUSD 100Visit Broker >>
10Read ReviewCySEC,MISA, FSCAUSD 20Visit Broker >>

Additionally, the ongoing battle against inflation poses challenges as progress in taming it has yet to inspire enough confidence for a decisive victory. While Fed officials have hinted at a potential peak in interest rates, they stressed the need for further evidence of cooling inflation before considering easing measures. This cautious approach has shifted market expectations for rate cuts from March to June and provided short-term strength to the Dollar amid expectations of delayed rate adjustments.


Downside Risks to Bullish Outlook

However, despite these positive indicators, the bullish outlook has notable downside risks. The unexpected 0.8% decline in retail sales raises concerns about consumer spending, a crucial driver of economic activity. This decline suggests potential headwinds for consumer activity, which could dampen economic momentum in the near term.

Furthermore, while inflationary pressures persist, the Consumer Price Index (CPI) has moderated slightly compared to previous months. This moderation could alleviate concerns about runaway inflation, paving the way for the Federal Reserve to initiate its easing cycle in the latter part of the year. These factors contribute to a nuanced economic landscape, as traders weigh robust labor markets and wage growth against weaker consumption.


Technical Perspective


From a technical perspective, prices are currently within an ascending channel and nearing the 103.20 support zone, which coincides with the Fibonacci confluence levels. Maintaining above this zone might trigger a continuation of the rally toward the resistance zone at 105.00. Conversely, a breakout below the 103.20 support level could lead to a downward movement, with 102.00 as the next potential support target. Stochastic is nearing the oversold region, which could suggest the potential for a price rebound.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Li Xing Gan
Li Xing Gan
Financial Markets Strategist
Li Xing Gan is a Financial Markets Strategist who specializes in providing daily analysis on commodities, currencies, and equities to brokerages. With expertise in both fundamental and technical analysis, Li Xing delivers valuable insights to assist brokerages in making informed decisions.
Related Articles