USD weakens as US consumer spending data disappoints

The US Dollar Index has declined 0.4% to 104.30 following weaker-than-expected US consumer spending data, raising concerns about economic momentum. Personal spending rose just 0.2% in April, missing the 0.4% forecast and marking the slowest growth in three months. The disappointing data has weighed on USD across major pairs, with EUR/USD advancing 0.35% to 1.0860 and USD/JPY falling 0.5% to 156.50. The Swedish krona showed particular strength, with EUR/SEK dropping 0.6% to 11.42 as risk sentiment improved in European markets. Market participants are reassessing Fed rate expectations, with futures now pricing a 70% chance of a September cut versus 60% before the data. Technical indicators suggest further USD weakness possible, with the DXY approaching key support at 104.00. The soft spending figures, combined with cooling inflation expectations, could prompt the Fed to adopt a more dovish stance in upcoming communications.