The US dollar trades in a bearish trend on a calm Monday, markets pay attention to GDP and PCE data

• Data on US income, spending, consumer confidence and first-quarter GDP will determine the trajectory of the index this week.
• The Fed's Beige Book report on Wednesday is expected to suggest a balanced economic outlook.
• Investors anticipate a less than 80% chance of a rate cut in November and a 50% chance of a cut in September.

The US Dollar Index (DXY) is seeing some losses on Monday as US markets remain closed for the Memorial Day holiday. Market participants look ahead to Thursday's Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) Price Index data in hopes of additional information on the Federal Reserve's (Fed) stance and the health of the economy. Wednesday's Beige Book report will also be highly anticipated.

The US economy, supported by strong data, allows the Fed to maintain its hawkish stance, cushioning the US dollar. Despite some signs of a weakening labor market and muted consumer spending, inflation remains high, justifying Fed officials' continued talk of patience.

Daily Market Summary: DXY dips slightly ahead of this week's key data, all eyes on Fed officials' remarks

• Fed officials, including Mester, Bowman, Kashkari, Cook and Daly, are expected to continue advocating for a cautious approach in their speeches scheduled throughout the week. The markets continue to adjust their expectations, the probabilities of a cut in September are around 50%.
• The April Personal Consumption Expenditure (PCE) Price Index report is expected on Friday. The projections remain at 2.7% year-on-year for general inflation, 2.8% for core inflation.
• First quarter GDP is expected to be revised to 1.3% on Thursday.
• The high-level data outcome will continue to shape expectations about the easing cycle, dictating the pace of the USD.

DXY Technical Analysis: US Dollar Faces Selling Pressure as Bulls Struggle

The daily chart indicators show increasing bearish momentum on the DXY. The RSI is on a negative slope and remains in negative territory, suggesting that selling pressure prevails. This is further confirmed by the flat red bars of the MACD indicator.

As for the SMAs, the DXY is trading below the 20-day SMA, indicating the short-term efficiency of the bears. Despite this, the DXY remains above the 100-day and 200-day SMAs, suggesting that the bulls have relative strength on a longer-term basis.