US Dollar Index holds position above 107.00 ahead of Retail Sales figures

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos


  • The US Dollar Index depreciated following Trump's decision to delay the implementation of reciprocal tariffs.


  • US Retail Sales are forecasted to contract by 0.1% MoM in January, following a previous increase of 0.4%.


  • The Greenback may gain ground as US Core PPI inflation has increased the odds of the Fed delaying rate cuts.


The US Dollar Index (DXY), which tracks the US Dollar's (USD) performance against six major currencies, remains stable after losses in the previous session. At the time of writing, the DXY hovers around 107.00, while yields on 2-year and 10-year US Treasury bonds stand at 4.31% and 4.53%, respectively.


The US Dollar faces pressure following President Donald Trump's decision to delay the implementation of reciprocal tariffs. Additionally, declining US Treasury yields weigh on the Greenback, despite ongoing concerns about a global trade war.


Investor attention now shifts to the upcoming US Retail Sales report, the last key economic release of the week. Markets anticipate a slight monthly decline of 0.1% in January, following a 0.4% increase in the previous period.


Core PPI inflation in the United States (US) rose to 3.6% YoY in January, exceeding the expected 3.3% but slightly below the revised 3.7% (previously reported as 3.5%). This has reinforced expectations that the Federal Reserve (Fed) will delay rate cuts until the second half of the year. Additionally, persistently strong inflation could further support the outlook for the Fed to keep interest rates at 4.25%-4.50% for an extended period.


In his semi-annual address to Congress, Fed Chair Jerome Powell stated that policymakers “do not need to be in a hurry” to cut interest rates, citing a strong labor market and robust economic growth. He also warned that President Trump’s tariff policies could drive prices higher, complicating the Fed’s ability to lower rates.


A Reuters poll of economists now suggests the Fed will delay interest rate cuts until the next quarter due to rising inflation concerns. Many analysts who had previously anticipated a March rate cut have revised their forecasts, with the majority of respondents (surveyed between February 4-10) now expecting at least one rate cut by June, though opinions on the exact timing remain divided.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
EUR/USD remains below 1.1800 due to renewed trade concerns, Eurozone Retail sales eyedEUR/USD edges lower after registering gains in the previous session, trading around 1.1780 during the Asian hours on Monday.
Author  FXStreet
1 hour ago
EUR/USD edges lower after registering gains in the previous session, trading around 1.1780 during the Asian hours on Monday.
placeholder
GBP/USD lacks firm intraday direction, flat lines around mid-1.3600sThe GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow band around mid-1.3600s during the Asian session amid mixed fundamental cues.
Author  FXStreet
1 hour ago
The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow band around mid-1.3600s during the Asian session amid mixed fundamental cues.
placeholder
USD/JPY slumps to near 144.30 as Yen’s safe-haven demand increasesThe USD/JPY pair falls over 0.4% to near 144.30 during European trading hours on Friday.
Author  FXStreet
Jul 04, Fri
The USD/JPY pair falls over 0.4% to near 144.30 during European trading hours on Friday.
placeholder
AUD/USD drifts to 0.6550 as concerns about US tariffs resurfaceThe Australian Dollar is trading lower for the second day in a row, retreating from year-to-date highs, at 0.6590.
Author  FXStreet
Jul 04, Fri
The Australian Dollar is trading lower for the second day in a row, retreating from year-to-date highs, at 0.6590.
placeholder
Pound Sterling stabilizes as UK Chancellor Reeves confirms to remain in the role The Pound Sterling (GBP) trades broadly stable against its peers on Friday.
Author  FXStreet
Jul 04, Fri
The Pound Sterling (GBP) trades broadly stable against its peers on Friday.