US dollar weakens after Presidents’ Day, ahead of FOMC minutes

The US Dollar Index, DXY, weakens as the US returns from holiday, trading modestly lower. No relevant reports were released during the session, while markets await fresh catalysts. All eyes are now on FOMC minutes from January’s Federal Reserve meeting on Wednesday.

The dollar is trading in the red territory, modestly lower at the 104.05 mark with no relevant highlights seen during the European and American sessions.

Despite a post-holiday dip, the dollar’s stance remains firm amidst a resilient US economy and a seemingly unshakeable Fed, whose reluctance to resort to monetary easing may eventually limit the Greenback’s losses.

Markets await fresh drivers to continue timing the start of the Fed’s easing cycle. FOMC’s January Meeting Minutes are due on Wednesday.

Market anticipation is also brewing for upcoming speeches from Federal Reserve members Bowman (Wednesday) and Kashkari (Thursday) to gather additional insights.
According to the CME FedWatch Tool, the odds of a Fed cut have significantly declined for the March and May meeting as markets push the projected start of easing to June.

Technically, the DXY Index gives up 100-day SMA, more downside may be on the horizon

The technical picture is contradictory; the declining green bars in the Moving Average Convergence Divergence (MACD) histogram point to a slowdown in buying pressure and a possible shift in sentiment, while the Relative Strength Index (RSI) exhibits a negative slope, implying a weakening of bullish momentum.