**US Dollar Weekly Outlook: DXY Wavers Below 96.80 Amid Economic Data Releases and Fed Speak**
*Original source: “Forecasting the Upcoming Week: US Dollar Struggles Near 96.80 Ahead of PCE, Fed Speakers” by FXStreet News.*
The US dollar has entered a period of subdued volatility, lingering below the 96.80 level on the US Dollar Index (DXY) as traders await a series of key macroeconomic indicators and speeches from Federal Reserve officials. Following a soft performance in recent sessions, the greenback finds itself under pressure from both dovish leanings within the Federal Reserve and a mixed macroeconomic backdrop.
As we head into another pivotal trading week, market participants are watching Personal Consumption Expenditures (PCE), labor market data, and inflation-oriented language from policymakers to assess the path forward for monetary policy and the dollar. This comprehensive forecast outlines the week ahead for the US dollar by evaluating the macroeconomic environment, technical analysis of DXY, expected data releases, and central bank rhetoric.
### Key Highlights:
– The DXY remains vulnerable below the 96.80 threshold, showing signs of a potential trend reversal.
– Traders brace for the Fed’s preferred inflation gauge, the Core PCE Price Index, along with several other economic metrics.
– Supply chain normalization, declining energy costs, and slowing inflation are reshaping expectations.
– Fed speakers throughout the week may offer additional clues regarding future rate hikes or cuts.
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### 1. Current Market Conditions: DXY Under Pressure
The US Dollar Index (DXY), which measures the value of the American dollar against a basket of six major global currencies, has faced difficulty staying above the 96.80 level. This is largely due to:
– A slower-than-expected tightening trajectory from the Federal Reserve despite elevated inflation.
– Softer economic data from sectors such as housing and manufacturing.
– Global risk sentiment stabilization, prompting capital flows into higher-yielding assets and away from the safety of the dollar.
The DXY reached its recent peak in 2022 driven by an aggressive rate hike cycle, but the forward momentum has cooled significantly in 2024. As of mid-February, markets are pricing fewer rate hikes and even potential cuts into late Q3 or Q4 2024.
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### 2. Upcoming Economic Events: Data Driving Direction
Macro data in the coming week will play a critical role in defining the US dollar’s trajectory. Among the key releases:
#### a. Core PCE Price Index (Thursday)
– **Consensus Forecast:** +0.4% month-over-month for January.
– **Importance:** This is the Fed’s preferred inflation barometer. A hotter-than-expected reading can renew speculation for further hikes, which would support the dollar.
– **Market Impact:** Volatility typically increases given its influence on interest rate expectations.
#### b. Durable Goods Orders (Tuesday)
– **Forecast:** -4.5% for January due to weakness in transportation equipment.
– **Details:** Excluding transportation, durable goods demand remains solid, indicating sustained business investment.
– **Impact on DXY:** A weak print may pressure bond yields and the dollar further.
#### c. Second Estimate of Q4 US GDP (Wednesday)
– **Initial Reading:** 3.3% annualized, exceeding expectations.
– **Revision Anticipated:** Likely minor, but any deviation could adjust economic outlooks.
– **Dollar Implication:** Strong GDP figures would boost investor confidence in a soft landing scenario.
#### d. Weekly Jobless Claims (Thursday)
– **Current range:** Stabilizing around 210K, suggesting strong labor market conditions.
– **Effect on Dollar:** Persistent strength supports the case for a hawkish Fed bias.
### Economic Calendar Summary:
| Date | Event | Consensus Forecast | Importance |
|————-|——————————-|———————|————|
| Feb 27 (Tue)| Durable Goods Orders (Jan) |
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