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The U.S. dollar kicked off the new week on a subdued note, relinquishing some of its gains from the previous week, as traders awaited the release of pivotal inflation figures alongside further insights from Federal Reserve policymakers.
At 05:20 ET (09:20 GMT), the Dollar Index, measuring the greenback against a basket of major currencies, dipped 0.2% to 104.010, following a nearly 1% weekly uptick last week.
Consolidation After Dovish Signals
The dollar experienced a mild pullback from its one-month high at the week’s commencement. Last week’s dovish sentiments from central banks like the Swiss National Bank and the Bank of England suggested the dollar would remain the primary high-yielding, low-risk currency for the foreseeable future.
While the Fed hinted at potential rate cuts totaling 75 basis points this year, it emphasized these moves would hinge on inflation trends.
Attention now turns to the core personal consumption expenditures price index, scheduled for release during the Good Friday holiday. This index, excluding food and energy prices, is anticipated to have risen 0.3% in February, following a notable uptick in the previous month.
A series of speeches by Federal Reserve officials, including Fed Chair Jerome Powell and others, will be scrutinized for insights into interest rate policy, with market participants keen to gauge the likelihood of rate cuts starting as early as June.
European Currency Resilience and Inflation Indicators
In Europe, both GBP/USD and EUR/USD saw modest gains, bouncing back after last week’s sharp declines against the dollar. Heightened expectations for rate cuts by the European Central Bank and the Bank of England following recent dovish signals contributed to market dynamics.
Europe is bracing for its own inflation indicators this week, with consumer price data releases from various countries preceding the eurozone CPI report next week.
Yen Finds Support Amid Verbal Warning
USD/JPY edged 0.1% lower at 151.28 as the yen received a boost following a cautionary statement from a top Japanese finance official regarding potential government intervention to curb yen depreciation.
Yuan Rebounds Amidst Chinese Central Bank Action
USD/CNY slipped 0.2% to 7.2120 after reports that the People’s Bank of China directed state-owned banks to increase yuan purchases and reduce dollar holdings, aimed at bolstering the Chinese currency. The yuan had recently touched four-month lows amid concerns about China’s economic growth.
