The US Dollar Index (DXY) maintains its position near 104.00, following the strong US labor market performance on Friday that contributed to USD strength. Analysts at ING assess the outlook for the Greenback.
Today’s focus will be on the release of ISM services data, expected to show an improvement to 52.0 from the previous 50.5. It is unlikely that any soft numbers in today’s data will reverse the market reaction observed on Friday.
Looking ahead to Friday this week, there will be revisions to the 2023 US CPI series. The Federal Reserve’s current stance emphasizes the need for confidence in the disinflation process before considering rate cuts. The upcoming CPI revisions carry a slight risk that the positive late-2023 disinflation trend might be revised, potentially leading to a positive impact on the Dollar and a negative impact on risk sentiment. This event poses a significant risk and requires careful monitoring.
Anticipate continued low volatility with range-bound trading for DXY, expected to hover between 104.00 and 104.25 on the topside, with a potential downside support around 103.20.