The US Dollar Index (DXY) remains underpinned after surpassing 103.00 last week. Economists at DBS Bank analyze Greenback’s outlook.
Critical support levels include the 103.10 mark, aligning with its 50-DMA, and the 38.2% Fibonacci retracement level from its plunge from 107.10 to 100.60 in November-December.
Despite the Federal Reserve's blackout period, Fed officials have clearly dismissed endorsing the March rate cut pushed by markets at the FOMC meeting on 30-31 January. This week’s important economic data should reinforce the Fed’s patient stance.
On Thursday, consensus sees advanced GDP growth declining to 2% QoQ saar in 4Q 2023 from 4.9% in the previous quarter, supporting a soft-landing scenario. On Friday, markets will be wary of PCE inflation echoing the CPI's uptick by rising 0.2% MoM in December vs. the 0.1% decline a month earlier. Any unexpected results in these reports could push the DXY to test resistance near 104.50, near its 100-DMA and 61.8% Fibo level.