USD/THB challenges the 20-day SMA, as the Dollar holds steady

• The USD/THB modestly advances in Friday’s session standing near 36.63.
• Fed officials exercising caution against premature policy easing limits further downtick in USD.
• Better-than-expected growth in US Durable Goods Orders for April lends a helping hand to the Greenback.
• The focus will turn to next week’s GDP and PCE data from the US.

The USD/THB pair is trading slightly higher near the 36.63 level, showing mild gains, and bulls are challenging the 20-day SMA at 36.66. The pair remains steady as the cautious stance of the Federal Reserve (Fed), as well as strong economic indicators, justify the call for patience of the officials and hence the delay of the rate cuts.

In the American scenario, the Federal Reserve officials maintain a cautious stance against any premature policy easing, attributing their restraint to the consistent strength of the US economy and persistent inflation. The recently released data for Durable Goods Orders in April also lends support to this stance, with an increase reporting a 0.7% rise which outperformed expectations. This outcome portrays a growing US economy that is additionally backed by firm labor market data reported in Thursday’s lower-than-expected weekly Jobless Claims.

In the meantime, the CME Group’s FedWatch Tool suggests a 53% possibility of a reduction in interest rates by September, down from over 60% earlier this week, echoing rising hawkish bets on the Fed which favors the USD.

USD/THB technical analysis

In the daily analysis, the Relative Strength Index (RSI) shows a gradual shift from negative to positive territory. A rebound from near-oversold conditions on Thursday hints at a potential market recovery, with a slightly positive slope indicating growing buying momentum. Simultaneously, the Moving Average Convergence Divergence (MACD) histogram prints flat red bars, suggesting diminishing selling traction.

USD/THB daily chart

Looking at the broader scope, USD/THB displays considerable resilience, standing firm above its Simple Moving Averages (SMA), and holding above the 100, and 200-day SMA thresholds, it paints a bullish signal for long-term outlooks. If buyers conquer the 20-day SMA, the outlook will also be positive for the short term.