The US dollar falls further after the release of the US PCE.

• The US Dollar is trading lower due to weaker PCE and spending numbers.
• Markets see no reason to believe Fed officials' rate hike calls.
• The US Dollar Index is trading towards lower levels at 104.00.

He US dollar (USD) trades lower on Friday ahead of the US session with the Personal Consumption Expenditure (PCE) Price Index out of the way. Although there were no major surprises, the confirmation that disinflation is still underway is a good sign. Traders now feel comfortable ignoring recent calls and concerns from Fed officials about a rate hike.

On the economic data front, no big data items are expected this Friday. Next week promises to be a little busier with the US Employment Report on Friday and a slew of data to be released ahead of the report.

Daily Digest of Market Drivers: Lowest PCE in Three Years

• The Personal Consumption Expenditure Price Index for April:
  • The monthly headline PCE was as expected at 0.3%, unchanged, while the annual headline PCE was stable at 2.7%.
  • The monthly core PCE went from 0.3% in March to 0.2% in April. Annual core PCE was unchanged at 2.8%.
  • Personal income fell to 0.3%, slowing from 0.5% the previous month.
  • Personal spending fell to 0.2% from 0.7%.
• The Chicago PMI for May is expected to come in at 41, still in contraction territory, although a little better compared to the previous 37.9.
• Federal Reserve Bank of Atlanta President Raphael Bostic will close this Friday with a speech at Augusta Technical College's spring graduation ceremony around 10:15 p.m. GMT.
• Stocks are enjoying the lowest PCE number with major European and US indices in green.
• According to CME's Fedwatch tool, Fed funds futures price data suggests a 49.0% chance of keeping rates unchanged in September, versus a 45.1% chance of a 25 basis point rate cut. (bps) and a 5.4% chance of a 50 bps rate cut. A marginal 0.5% foresees an increase in interest rates.
• The 10-year US Treasury bond yield is trading around 4.51% and continuing to fall.

DXY Dollar Index Technical Analysis: The Fed will be ignored

The US Dollar Index (DXY) has dropped the currency and fell out of favor of the Dollar. Clear devaluation for the US Dollar with disinflation back on track. Markets can now almost completely ignore recent comments from some Fed officials that a rate hike may be necessary first.

To the upside, the DXY index regained key levels: the 55-day SMA, currently at 104.98, and the big round level of 105.00. It will be important to see if these levels hold support in case the US data weakens. Once that is confirmed, look for 105.52 and 105.88.

On the downside, the 200-day SMA at 104.43 and the 100-day SMA around 104.40 are the last line of defense. Once that level is broken, 104.30 and 103.00 emerge. If the US Dollar decline persists, the levels to consider are the March low at 102.35 and the December low at 100.62.