- The index extends the decline and challenges 103.00.
- US inflation figures is expected to have retreated further in December.
- US yields trade slightly on the defensive on Thursday.
The greenback, when tracked by the USD Index (DXY), adds to Wednesday’s tepid losses and pokes with the 103.00 neighbourhood on Thursday.
USD Index looks at US CPI
The index drops for the second session in a row on Thursday and probes the 103.00 support on the back of the generalized flat sentiment in the global assets.
Indeed, prudence prevails among market participants ahead of the release of crucial US inflation figures for the month of December..
These results have grown in importance in past sessions, particularly after the release of the US labour market report on January 6, amidst increasing speculation of a potential pivot in the Fed’s monetary tightening.
Other than the publication of the CPI, weekly Initial Claims are also due as usual along with the Monthly Budget Statement.
What to look for around USD
The dollar remains under pressure and trades in a side-lined fashion near the 103.00 yardstick amidst investors’ prudence and ahead of US CPI due later in the session.
The mixed results from the US Nonfarm Payrolls for the month of December (Friday) seem to have reignited the idea of a probable pivot in the Fed’s policy in the next months, which comes in contrast to the message from the latest FOMC Minutes, where the Committee advocated the need to remain within a restrictive stance for longer, at the time when it ruled out any interest rate reduction for the current year.
Furthermore, the tight labour market, still elevated inflation and the resilient economy are also seen supportive of the firm message from the Federal Reserve and its hiking cycle.
Key events in the US this week: Inflation Rate, Initial Jobless Claims, Monthly Budget Statement (Thursday) – Flash Michigan Consumer Sentiment (Friday).
Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.
USD Index relevant levels
Now, the index is retreating 0.03% at 103.22 and the breach of 102.94 (monthly low January 9) would open the door to 101.29 (monthly low May 30) and finally 100.00 (psychological level). On the other hand, the next up barrier comes at 105.63 (monthly high January 6) followed by 106.38 (200-day SMA) and then 107.19 (weekly high November 30).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold nears $3,400; fresh record highs and counting amid USD sell-off
Gold price closes in on $3,400 as the record rally regains strength on Easter Monday. Concerns over US-China trade war escalation and the Fed’s independence smash the US Dollar to three-year troughs. RSI stays overbought on the daily chart, with thin volumes likely to exaggerate moves in Gold price.
EUR/USD trades with sizeable gains above 1.1500, at over three-year highs
EUR/USD trades over 1% higher so far this Monday as the relentless selling interest in the US Dollar keeps it well above the 1.1500 threshold - the highest level since November 2021. Growing concerns over a US economic recession and the Federal Reserve’s autonomy continue to exert downward pressure on the USD.
GBP/USD stays strongly bid near 1.3400 on intense US Dollar weakness
GBP/USD continues its winning streak that began on April 8, trading close to 1.3400 in early Europe on Monday. The extended US Dollar weakness, amid US-Sino trade war-led recession fears and heightened threat to the Fed's independence, continue to underpin the pair. Thin trading is set to extend.
How to make sense of crypto recovery – Is it a buy or fakeout
Bitcoin (BTC), Ethereum (ETH) and XRP, the top three cryptocurrencies by market capitalization, extend their last week’s recovery on Monday, even as trader sentiment is hurt by the US President Donald Trump’s tariff policy and announcements.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.