The U.S. Dollar Index (DXY) is trading nearly 0.28% lower today. However, the index still remains about 1.9% higher so far this month amid a slew of macro data and global central bank narratives.
In the U.S., initial jobless claims increased by 25,000 to 214,000 for the week ended January 20. In the fourth quarter, GDP rose stronger than expectations at a rate of 3.3% on the back of resilient consumer spending. Further, growth in the core personal consumption expenditure price index moderated to 2.9%. The metric boosted the case for a soft landing.
In China, moves to slash bank reserve ratios and interest rates could mean limited upside for the Yuan as the country’s authorities look to support its economy. Japan is largely expected to opt for a rate hike over the coming months. However, any surprise from the Bank of Japan could dash hopes of a rally in the Yen.
Meanwhile, the European Central Bank has stuck to record high-interest rates and its intention to fight inflation. The bank still feels that a discussion on rate cuts is still some time away. While traders are anticipating a rate cut in Europe over the coming months. Shipping-disruption-induced inflation could play spoilsport.
The U.S. Dollar is showing signs of weakness amid these developments. In the short term, the DXY faces resistance at the 103.8 level.
Source: TradingView
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