US S&P PMI figures from April came in softer than expected and made markets dump the USD.
Hawkish bets and high US Treasury yields may limit the downside for the USD.
All eyes are set on PCE and GDP data on Thursday and Friday.
The US Dollar Index (DXY) is trading softly at 105.70 tallying daily losses on Tuesday's session. The Federal Reserve (Fed) has been sending a consistently hawkish message, which might limit the Greenback’s losses as markets delay the start of the easing cycle. Investors are also keeping an eye on vital economic reports due this week, including the preliminary figures of Q1’s Gross Domestic Product (GDP) Growth Rate and the Personal Consumption Expenditures (PCE) Price Index from March to gain further insight into the economy's health. During Tuesday’s session, S&P PMIs came in lower than expected and made the USD face selling pressure.
Despite the weak PMIs, the US economy exhibits overall resilience. The Fed's stance leans hawkish, manifesting itself in reduced odds of rate cuts in the near future and not until September. PCE and GDP data later this week will likely fuel volatility in markets as they will continue shaping the expectation on the next Fed decisions.
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