The US Dollar Index (DXY) experienced a slight decline on Wednesday, reaching 104.20, primarily driven by mixed S&P PMI figures and continued market anticipation of a dovish Federal Reserve (Fed) policy.

Market Developments:

• S&P Global Composite PMI: The private sector in the US continued to expand, with the Composite PMI rising to 55 in July from 54.8 in June.
• S&P Global Manufacturing PMI: The Manufacturing PMI unexpectedly contracted to 49.5 in July from 51.6 in June, suggesting a slowdown in the sector.
• S&P Global Services PMI: The Services PMI showed a slight increase to 56 in July from 55.3 in June, indicating continued growth.

Market Sentiment:

Despite the mixed PMI data, market participants remain confident in a potential rate cut by the Fed in September due to emerging signs of disinflation. However, Fed officials are maintaining a cautious approach, emphasizing their data-dependent stance. The focus now shifts to upcoming core Personal Consumption Expenditures (PCE) and Q2 Gross Domestic Product (GDP) figures, which could significantly influence the Fed’s decision-making.

Technical Analysis:

The DXY is displaying a neutral to bearish outlook, with key indicators like the RSI and MACD remaining in negative territory. A bearish crossover between the 20-day and 100-day Simple Moving Averages (SMA) at 104.80 reinforces the negative sentiment, further confirmed by the index falling below the 200-day SMA.

Support levels for the DXY are identified at 104.15 and 104.00, while resistance levels are found at 104.30 and 104.50.