US DOLLAR TRADES NEUTRALLY AS CPI DATA LOOMS, TREASURY YIELDS DECLINE
- The DXY Index is neutral at 104.12 and manages to clear daily losses.
- All eyes are set on Wednesday's US CPI figures for March.
- The outcome of the inflation figures will set the tone of the market’s bets on the Fed.
The US Dollar Index (DXY) is currently trading at 104.12, remaining rather neutral. Markets stand largely quiet as the week's highlight is the release of March’s US Consumer Price Index (CPI) figures on Wednesday. In the meantime, declining US Treasury yields seem to be weakening the US Dollar, and minor data releases have failed to trigger a significant reaction.
The data will continue fueling expectations for the Fed's easing cycle and as for now is seen starting in June. Amid two months of high inflation, the Fed revised its projections upward, but Jerome Powell confirmed a complacent attitude toward these figures. Consequently, the US Dollar remains in suspense, awaiting potential policy shifts tied to incoming data. Last week’s hot labor market figures may set the tone for a more hawkish Fed if inflation comes in higher than expected.
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