The US Dollar staged a broad comeback on Tuesday following the release of discouraging consumer confidence data by the Conference Board. The latest figures showed a slump to 104.1, falling short of the expected 105.6, as Americans expressed growing pessimism about future employment prospects. This unease in the labor market marked the first decline since September and contributed to increased market risk aversion. Meanwhile, the US Dollar Index (DXY) climbed 0.4% to 107.86, putting pressure on the GBP/USD amid concerns over fresh tariff threats by President Donald Trump.
The Pound Sterling extended its losses against the Greenback, with the GBP/USD exhibiting a downward bias. Buyers struggled to elevate prices above the critical 50-day Simple Moving Average (SMA) of 1.2521. Analysts noted that a daily close below the January 27 low of 1.2425 could lead to testing new support at 1.2400. Should this level be breached, the next target would be the January 22 high of 1.2375.
The US Durable Goods Orders further fueled market jitters, plummeting by -2.2% month-over-month in December. This drop was significantly worse than the anticipated 0.6% increase and even more severe than November’s -2% contraction. These figures underscored the challenges facing the US economy and contributed to the headwinds for the GBP/USD pair.
Investors are closely watching the Federal Open Market Committee (FOMC) decision scheduled for January 29, where it is widely expected that the Federal Reserve will keep interest rates on hold. However, traders remain cautious amid fresh tariff headlines that have provided an extra boost to the US Dollar. President Trump’s threats to impose tariffs on computer chips and other industries have heightened market uncertainty and added pressure on risk-sensitive currencies.
The Conference Board's report revealed that all five components of the consumer confidence index deteriorated, reflecting a broad-based decline in sentiment. Additionally, inflation expectations saw an uptick from 5.1% to 5.3%, indicating potential inflationary pressures on the horizon.
In contrast to the gloomy economic outlook, Bitcoin (BTC) experienced a recovery driven by MicroStrategy’s purchase of 10,107 BTC for $1.1 billion and the launch of its convertible preferred stock STRK. This move highlighted continued interest in digital assets as a hedge against economic uncertainty.