The dollar regained momentum following mixed US labor data, as attention shifts to the upcoming CPI report, the final major economic indicator before the Fed’s policy meeting

The dollar index climbed on Monday as market sentiment shifted in favor of a less aggressive 25 basis point Fed rate cut, following mixed US labor data that indicated a controlled slowdown in the labor market.

While the dollar gained from these dovish expectations, investors are awaiting further clarity on the Federal Reserve’s potential decisions, particularly with the release of the US inflation report for August, due on Wednesday. This data is expected to complete the puzzle that US policymakers are closely monitoring ahead of their meeting later this month.

Despite the dollar’s uptick, concerns about the state of the US economy persist, as recent reports suggest it is on the brink of a recession, keeping both traders and the Fed cautious.

Economists predict that consumer prices will rise at a steady monthly rate of 0.2% in August, while annual inflation is forecast to ease to 2.6%, down from 2.9% in July.

Technically, the daily chart shows improvement, with upward momentum and the price breaking above the converging 10/20-day moving averages. Friday’s long-tailed candlestick indicates strong demand. However, confirmation is needed, with a close above the 20-day moving average (101.44) being the first signal, and a sustained break above 101.84 (Sep 3 lower top) required to confirm a bullish reversal.

Res: 101.65; 101.84; 102.03; 102.64
Sup: 101.23; 101.08; 100.49; 100.38