US Dollar consolidates losses, remains below 93

After reaching its highest level of the week at 93.30 during the European session, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, came under a heavy selling pressure following the macro data releases from the U.S. and erased its gains, turning negative on the day. At the moment, the index was at 92.72, losing 0.13% on the day.

According to the data released by the Bureau of Economic Analysis, the PCE price index retreated to 1.4% on a yearly basis in July from 1.5% in June, moving further away from the Fed's 2% target rate, dampening the expectations of another rate hike before the end of the year and weighing on the buck. The CME Group FedWatch tool shows that markets are pricing a 35.7% probability of a 25 bps hike in December. 

Other data from the U.S. showed that the personal income rose 0.4% in July after remaining unchanged in June, however, this increase failed to reflect upon the personal spending, which came in at 0.3% and missed the market estimate of 0.4%.

On Friday, the critical nonfarm payrolls from the U.S. will be released. However, the investors' focus will be on the average hourly earnings, which is expected to ease to 0.2% from 0.3% on a monthly basis in August. Omkar Godbole, Editor and Analyst at FXStreet, writes, "A strong NFP along with an improvement in the labor force participation rate would mean people are feeling increasingly confident about the US growth story. In such a case, the Fed would want to avoid raising rates at a faster rate since strong jobs gains highlights the slack in the labor market. Strong wage price inflation numbers would not only boost rate hike bets, but also improve the odds of the Fed beginning the balance sheet runoff program in September."

• NFP preview: Another solid report coming in August - Wells Fargo

Technical outlook

The index could encounter the first technical support at 92 (psychological level) ahead of 91.55 (Aug. 29 low) and 91.00 (psychological level). On the upside, resistances could be seen at 93.30 (daily high), 94.05 (Aug. 16 high) and 95 (psychological level). 

Today's data from the U.S.

• US: Personal income increased $65.6 billion (0.4%) in July
• US: Weekly initial claims was 236,000, an increase of 1,000 from previous week
• US-based employers announced plans to cut payrolls by 33,825 in August
• US: Pending home sales lessen 0.8% in July
• US: August Chicago Business Barometer stayed unchanged at 58.9