Us Dollar Trims Gains

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Us Dollar Trims Gains

US Dollar Trims Gains As Risk Appetite Returns

The US Dollar (USD) is reversing some of its gains in the weekly timeframe after the recent inflation report. Although many economists viewed it as a one-off event, the markets viewed it differently.

Even Austan Goolsbee from the Federal Reserve added that the market players shouldn't consider the recent CPI readingthe plan to counter inflation is progressing, with the first rate cut in the next few months.

All Eyes On Us Retail Sales

For now, the focus is on the retail sales data, which remains the key economic indicator. Besides that, we also have the import/export prices and industrial production from the USA. These economic releases will also shed light on what's next from the Federal Reserve.

Given the recent conditions, the DXY will soon have difficulty touching the 105.00 level. For now, the DXY is near 104.36, which means even the 104.50 acts as a resistance.

Many experts believe the rapid bursts of volatility will remain a norm for the markets unless the Big Four banks make a move (rate cut or a rate hike). If the Fed moves into the rate cuts phase, the DXY will fall lower and may even breach the 104.00 support.

But if the recent data is Dollar positive, the DXY will easily cross the 105.00 handle with eyes on the 105.12 as the target. Next up will be the 105.88 resistance, which can act as a profit target for the traders.

Beyond that, the high of the year 2023, which is the 107.29 handle, will come back on the cards, but it will be soon to set eyes on such bullish targets. There's a higher chance of rate cuts than rate hikes in the USA.

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