Am I losing muscle or fat?

Over the last couple weeks I've refocused myself on charging up my workouts while getting my diet under better control.

To do this, I've been exercising EVERY day, instead of 4 to 6 days a week and tracking my food intake religiously. On average, according to my activity tracking, I'm burning about 3050 calories and consuming about 2525. My daily fat intake is about 60 grams, carbs about 340 and protein about 140 (I weigh 191). I've been doing fairly rigorous weight training, alternating between upper and lower body so I don't overtrain (One day a week I do just moderate intensity cardio.).

After about two weeks of this, I didn't expect any major change in weight or body fat percentage. Using a scale that measures body fat, I was 194 with 21 percent body fat from 54% water weight when I started. Now, I'm 191 with 21% body fat and 54% water weight.

Since I have been hitting the weights, doing cardio and controlling intake, my expectation had been that my water weight percentage would GO UP due to a little less fat that has a lower water content and a little more (or at least the same) muscle that has a higher water content. Instead, I've lost three pounds, but if the water content and fat percentage is exactly the same, where did the loss come from? Muscle or fat? If it's the former, it's a big concern since I want to be gaining strength while I lose fat.

Sounds like the scale might be a bit off, ask the gym if they have a caliper. Oh, and If you're pushing weights I'm guessing its fat that's going down.

If you're using a regular scale for those measurements, those are notoriously inaccurate. I'd suggest using calipers as well.

As much as a three pound loss is great and I'm not knocking your progress, it's only three pounds and those scales are just not that accurate.  I wouldn't actually gauge progress by what the fat percentage on a scale is, I would judge by pounds lost and what your body actually looks and feels like.  If you are hitting the weights and getting lots of protein, it is highly unlikely that you are losing much muscle, it is probably fat.

A body composition scale is just a tool. I use it each day first thing in the morning so the conditions are always consistent. I care less about the accuracy of the number than how it's trending over time. I have four months worth of data at the moment. When I started it said my body fat percentage was 30% and now it's 20%. I don't put stock in the accuracy of that number but am happy with the trend. It also gives me my lean body mass in pounds and again the actual number isn't as important to me as the trend which tells me it's remained fairly stable. My goal was to reduce body fat while preserving my lean body mass as best as possible. The trend data coming from my scale tells me I am achieving that.

At some point I'll go to the local university and find out my actual bf% by using their dunk tank.

I think measuring various parts of your body can be more effective than just weight. I've only lost 3 lbs in the last 3 weeks, but 6.75 inches. If I hadn't measured myself, I would be feeling really disheartened, but because I lost so many inches, I feel better.

I measure right and left arms and thighs, chest, waist, and hips.