US Dollar declines as markets anticipate Fed Minutes and CPI

• DXY snapped a five-day winning streak and seems to be taking a breather below 103.00
• Fed easing expectations have been tempered following last week's jobs report
• Fed speakers are expected to reiterate a gradual approach

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, witnessed a calm Monday session with mild losses, holding steady despite elevated levels near last week's highs. Amidst ongoing Middle East tensions, market participants await key events this week, including the release of the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) Meeting Minutes and US Consumer Price Index (CPI) data.

While the US economy exhibits moderate deceleration, indications of economic resilience persist. Despite this, the Fed maintains a data-driven approach, emphasizing the significance of incoming economic indicators in determining the pace of interest rate adjustments. In that sense, last week's jobs report made markets price out a 50 bps cut in November or December.

Daily digest market movers: Falling US Dollar as markets await CPI data

• The probability of a 50 bps cut in November or December is now zero, according to swap markets, and a 25 bps cut next month is only 90% priced in
• Despite strong economic data, the market still anticipates 125 bps of total easing in the next 12 months
• Multiple Fed speakers this week are anticipated to emphasize data-dependency
• This week, headline and core CPI are expected to show a mild deceleration in September, and its outcome might put a stop to the USD's upwards movement

DXY technical outlook: DXY momentum rests, resistance at 103.00

Indicators are resting after last week's gains, with the index ending a five-day uptrend. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are firmly in positive territory with room for further upside.

Supports: 102.30, 102.00, 101.80
Resistances: 103.00, 103.50, 104.00