USD Index remains offered and approaches 103.00 ahead of US CPI

The greenback, in terms of the USD Index (DXY), struggles to find footing near the 103.00 zone on turnaround Tuesday.

USD Index looks at US CPI

The index extends the pessimism seen at the beginning of the week and trades at shouting distance from the key 103.00 support on Tuesday.

In the meantime, the dollar keeps the range bound theme well in place amidst persistent investors’ prudence ahead of the release of key US inflation figures for the month of January due later in the NA session.

Other than the CPI, the docket will show the result of the NFIB Business Optimism Index in January and speeches by Dallas Fed L.Logan (voter, centrist), Philly Fed P.Harker (voter, hawk) and NY Fed J.Williams (permanent voter, centrist).

What to look for around USD

The dollar remains within a consolidative phase in the lower end of the recent range just above the 103.00 level against the backdrop of flat risk appetite trends.

The probable pivot/impasse in the Fed’s normalization process narrative will be put to the test later in the session with the publication of US inflation figures for the month of January, all amidst a so far favoured 25 bps rate hike at the March meeting.

The loss of traction in wage inflation – as per the latest US jobs report - however, seems to lend some support to the view that the Fed’s tightening cycle have started to impact on the still robust US labour markets somewhat.

Key events in the US this week: Inflation Rate (Tuesday) – MBA Mortgage Applications, Retail Sales, Industrial Production, Business Inventories, NAHB Index, TIV Flows (Wednesday) – Building Permits, Housing Starts, Initial Jobless Claims, Philly Fed Index (Thursday) – CB Leading Index (Friday).

Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Slower pace of interest rate hikes by the Federal Reserve vs. shrinking odds for a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is retreating 0.15% at 103.13 and the breach of 100.82 (2023 low February 2) would open the door to 100.00 (psychological level) and finally 99.81 (weekly low April 21 2022). On the other hand, the next resistance level emerges at 103.96 (monthly high February 7) seconded by 105.63 (2023 high January 6) and then 106.45 (200-day SMA).