The U.S. dollar index found buyers after U.S. GDP came in above expectations.
USDX – Daily Chart
The USDX has found support at 98.00 and will look for buyers to defend this area. If the bears remain in control, then the index can continue lower.
The U.S. economy was reported to have grown at a 4.3% annual rate in the third quarter, following the 3.8% growth rate in the second quarter. That was a sharp turnaround from the first quarter, where the economy shrank for the first time in three years.
The latest report also highlighted that stubborn inflation is a problem, as the Federal Reserve’s preferred inflation gauge rose to a 2.8% annual pace last quarter, from 2.1% in Q2.
The Fed has been taking a more cautious policy approach amid weaker economic signals. Economic growth has been rising even as inflation remains elevated above the central bank’s 2% target. The job market has also been a weak indicator lately, as unemployment has remained stuck.
Wall Street analysts expect the Fed to hold rates steady at its upcoming January meeting, which is slowing any potential investment flows into the U.S. dollar. Other central banks are hiking rates or standing pat, which is leading to weakness in the USDX. Consumer spending and confidence have also been affected by the inflation picture.
The Conference Board said on Tuesday that consumer confidence dropped 3.8 points to 89.1 in December, after an upward revision of 92.9 for November. That was back near the 85.7 reading from April, just as Trump rolled out his tariffs.
If you remove artificial intelligence spending from U.S. GDP, then the economy is much weaker. The U.S. dollar index has had a tough year since the tariffs were introduced, and the support levels will need to hold to avoid another weak start to 2026.
