Published: 23 February 2026,03:12
Daily Market Analysis New
*The U.S. dollar has weakened as legal uncertainty around the tariff ruling undermines near-term confidence.
*Softer GDP and PMI readings signal cooling but still resilient U.S. growth momentum.
*Sticky core PCE inflation keeps the Fed cautious but not decisively hawkish.
Market Summary:
The U.S. dollar has softened since late last week as a combination of legal, macro, and policy developments undermined near-term bullish momentum. The most immediate catalyst came after the U.S. Supreme Court struck down a significant portion of President Trump’s global tariff framework, injecting fresh uncertainty into the U.S. trade outlook and fiscal trajectory. Markets quickly interpreted the ruling as potentially widening the federal deficit, particularly given estimates that up to $175 billion in previously collected tariffs could face refund litigation prompting a modest retreat in the greenback.
At the same time, incoming U.S. data has painted a slightly softer growth picture. Fourth-quarter GDP expanded at just 1.4% annualized, well below expectations, while February flash PMIs slipped to multi-month lows across both manufacturing and services. The Fed’s preferred core PCE gauge accelerated to 3.0% year-over-year in December, highlighting persistent inflation pressures. Consumer sentiment data also showed only marginal improvement, reinforcing the view that economic momentum is cooling from late-2025 strength. This data mix has tempered aggressive dollar bullishness even as the U.S. economy remains broadly resilient.
Federal Reserve communication has added nuance rather than clear support for the currency. Governor Stephen Miran signaled he now sees a less accommodative rate path than previously expected, citing a firmer labor market and stubborn goods inflation. Similarly, Dallas Fed President Logan warned that upside inflation risks remain. However, San Francisco Fed President Daly struck a more balanced tone, noting inflation outside goods continues to ease and that policy is currently well positioned. This mixed messaging has kept rate expectations relatively anchored rather than pushing yields decisively higher.
Looking ahead, the dollar’s near-term direction will likely hinge on whether fiscal uncertainty tied to the tariff ruling persists and upcoming catalysts, including a scheduled speech from President Trump and the next U.S. Producer Price Index (PPI) release. While structurally supportive factors including still-restrictive policy and resilient employment remain in place, the recent combination of softer growth signals, legal uncertainty, and only moderately hawkish Fed rhetoric has shifted the short-term bias toward mild consolidation or downside pressure.
Technical Analysis
The U.S. Dollar Index is showing signs of exhaustion near the 98.00 resistance level after failing to sustain a breakout above the prior swing high. Price briefly pushed toward 97.967 but was quickly rejected, forming a lower high relative to the recent peak and slipping back below 97.45. This rejection reinforces the 98.00 level as a key supply area, while 97.00 now acts as immediate support.
Momentum indicators are beginning to roll over. RSI has dropped sharply from near 65 toward the mid-40s, signaling fading bullish momentum and a shift back toward neutral-bearish territory. At the same time, MACD histogram has turned negative, with the signal lines converging and starting to cross lower as a sign that upside momentum has stalled and short-term downside pressure is building.
Overall, the outlook has shifted from constructive to corrective. The recent rejection at resistance, combined with weakening momentum signals, suggests the dollar may consolidate or retrace further before attempting another directional push.
Resistance Levels: 98.00, 99.60
Support Levels: 97.00, 95.70
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