The US Dollar Index (DXY) is eagerly anticipating the release of US inflation data, with the Producer Price Index (PPI) data set to release on Tuesday, January 14, and the Consumer Price Index (CPI) on Wednesday, January 15. These reports will have a significant impact on the currency markets and could potentially shape the direction of the US Dollar in the near future.

Tariff rumors circulating from the Trump administration have caused a temporary halt in the US Dollar’s upward momentum. The market is currently eyeing key support for the DXY at 109.57, with resistance at the crucial 110.00 level. A break above 110.00 could signal a potential move towards the 111.00 mark, indicating a shift in market sentiment towards the US Dollar.

Currency Strength Chart: Strongest – Weakest

The latest currency strength chart ranks the currencies from strongest to weakest, with the New Zealand Dollar (NZD), Australian Dollar (AUD), Swiss Franc (CHF), Euro (EUR), British Pound (GBP), Canadian Dollar (CAD), Japanese Yen (JPY), and US Dollar (USD) in that order. This chart provides valuable insights into the relative strength of each currency in the current market environment.

Source: FinancialJuice

‘Incremental Tariff Chatter’ Leads to US Dollar Pause

The US Dollar started the week on a positive note following robust payroll data released on Friday. However, rumors of incremental tariffs being considered by the Trump administration have caused some uncertainty in the market. The proposal involves gradually increasing tariffs by 2%-5% each month to address potential inflation concerns and strengthen negotiation positions.

Key economic advisers, including Scott Bessent, Kevin Hassett, and Stephen Miran, are reportedly discussing this plan, although it has not been presented to President Trump yet. The news of potential tariffs has led to a brief recovery in US stocks and a slight setback for the US Dollar Index.

When are the US PPI and CPI Data releases?

This week’s focus will be on the release of the Producer Price Index (PPI) and Consumer Price Index (CPI) data for December. The PPI data is scheduled for release on Tuesday, January 14, at 13:30 (GMT Time), followed by the CPI data on Wednesday, January 15, at the same time.

PPI and CPI Data in Focus

After the recent jobs report, the PPI data will be closely watched for any signs of increasing price pressures. A rise in PPI data typically precedes an uptick in consumer price inflation (CPI), which could have implications for the US Dollar’s performance. Expectations are for the headline PPI data to align with estimates, with a potential uptick in core PPI for December.

Looking ahead to the CPI release, a slightly lower-than-expected print could provide some resistance to the US Dollar’s rally, albeit temporarily. The upcoming speeches by Fed policymakers John Williams and Thomas Barkin could also add volatility to the market.

Technical Analysis

The US Dollar Index (DXY) daily chart indicates a critical level around 110.00, where the index has faced selling pressure and profit-taking. The recent tariff news has contributed to this downward pressure, although there is still bullish momentum in play. Support is currently at 109.57, with a break lower potentially leading to further downside.

A daily close above 110.00 could signal a move towards 111.00 for the index, confirming a bullish trend. The golden cross pattern forming with the 100-day MA crossing above the 200-day MA further supports the bullish outlook for the US Dollar Index.

Support: 109.57

Resistance: 110.00

For more detailed analysis and market insights, refer to the original post.

Source: TradingView.com

By analyzing the market trends, upcoming data releases, and technical indicators, investors can gain valuable insights into the potential movements of the US Dollar Index. Understanding the significance of inflation data and tariff-related news can help investors make informed decisions and navigate the ever-changing financial landscape with confidence.

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