Dollar Index – bullish momentum slows ahead of US inflation data

The dollar index maintains a firm stance, holding above the previous peak of 105.79, though near-term trading has quieted early Wednesday in anticipation of a key economic event—today’s US inflation data.

The recent strong rally driven by post-election “Trump trades” has eased as markets await CPI figures, which are likely to influence the Fed’s approach to interest rate adjustments. Trump’s anticipated policy direction suggests that the Fed might pivot from its planned aggressive rate cuts, adapting instead to expected stronger economic growth and rising inflation.

This environment supports further dollar gains, with an initial target at 106.36 (May 1 peak) and a more critical resistance near 107.00 (October 2023 support level, range ceiling, and 50% retracement of the 114.72/99.20 decline). Breaking through this level could signal a broader range breakout, potentially triggering stronger advances.

The technical outlook remains bullish on the daily chart, with robust momentum and a bullish moving average setup, positioning the dollar near the upper boundary of its bullish channel (106.41). However, overbought conditions may prompt a consolidation phase, with shallow dips offering re-entry points for the uptrend.

Immediate support rests at the former peak (105.79), followed by the 5-day moving average (105.22) and the broken 76.4% Fibonacci level (104.82).

Res: 106.41; 106.96; 107.03; 107.88
Sup: 105.79; 105.22; 104.82; 104.62