We’re gearing up for a crucial week ahead. As many of you know, this week will feature the release of the US inflation data, which is pivotal for any potential shifts in the Fed's interest rate policy. Although the Fed currently maintains a restrictive policy, the latest US jobs report showed fewer jobs added than anticipated.
Therefore, if the upcoming inflation report also shows a decrease to 3.4% or lower, down from the previous 3.5%, it could significantly fuel speculations that the Fed might consider rate cuts later this year.
However, before we get to the inflation data release on Wednesday, we have another key event to watch: a speech by Fed Chair Powell on Tuesday, which could also trigger considerable market volatility. Currently, the market is in a risk-on mode, and metals are performing well, suggesting the dollar could face downward pressure if these trends from last week continue.
Looking at the hourly chart of the Dollar Index, there is no clear direction as the index remains neutral. However, the recent impulsive drop from 105.74 through the hourly trend line support hints at potential further weakness. We might see the index heading down to 104.86 or possibly even lower in the next few sessions. 