After a series of positive weeks, the US Dollar Index (DXY) is currently retracing towards the 104.00 level. Experts at ING offer insights into the future of the Greenback.
DXY Expected to Remain Within 104.00-105.00 Range This Week
It appears that the Dollar could retain its strength for the remainder of this month. This is supported by seasonal factors. However, the robust January US PPI data released on Friday suggests that the upcoming core PCE inflation data, due on February 29, might also indicate a significant increase of 0.4% month-on-month. Such data could counteract the disinflation trend. This is our primary outlook. We anticipate investors to reposition for a softer Dollar in early March, anticipating the release of the February CPI data on March 12. We predict that core inflation will revert to a 0.2% month-on-month reading.
In theory, we anticipate DXY to remain within the 104.00-105.00 range this week. Nevertheless, from a technical standpoint, DXY has shown a notable reversal, and any unexpected strength in the Euro could potentially lead to an unexpected breach below 104.00.
