USD Index remains offered and approaches 103.00 ahead of US CPI

The index remains side-lined around the 103.00 region.
Bullish attempts appear capped by the 104.00 area so far.
All the attention will be on the release of US CPI later in the session.

Pablo Piovano FXStreet

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).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD trims losses, still near 0.6900

AUD/USD remains well on the defensive, adding to Wednesday’s pullback and trading close to the key 0.6900 contention zone ahead of the opening bell in Asia. Discouraging prints from the Australian labour market report have weighed on the Aussie, which has remained unable to take advantage from the marked pullback in the Greenback.

USD/JPY slides back below 158.00 as USD reverses post-CPI gains

USD/JPY extends the previous day's pullback from a three-week high, attracting follow-through selling and sliding below 158.00 during Thursday's Asian session. Traders remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. The US Dollar, meanwhile, reverses Wednesday's hot CPI-led gains to April 2025 highs as US bond yields retreat on China bond-buying talk, further pressuring the pair.

Gold: Upside remains capped by $4,200

Gold regains the smile and leaves behind three consecutive days of losses, advancing to the $4,170 region per troy ounce on Thursday. The precious metal’s recovery comes amid the fresh offered stance in the Greenback and declining US Treasury yields while investors remain cautious ahead of the Fed’s Warsh speech on Friday.

Bitcoin rebounds to $82,000 as PPI hits 6.3%, nearly $1B liquidated

Bitcoin (BTC) recovered near $82,000 on Thursday after briefly falling below $80,000, paring losses triggered by hotter-than-expected US inflation data. September PPI inflation rose 6.3% YoY, exceeding forecasts of 5.3% and marking its second-highest level since November 2022. Core PPI inflation climbed to 5% annually, above expectations of 4.4%.

The Iran war will eventually end. Tariffs won't. Here's the problem

Two cost shocks are in the September Consumer Price Index (CPI), and they have different half-lives. Energy is up 20.4% on the year and accounts for about 1.3 points of the 3.7% headline, and that shock reverses when Oil does: Brent was back at its pre-war price on July 1 and above $100 again by the end of the month, after the ceasefire collapsed on July 8.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.