US Dollar gains broadly with US inflation data in focus

• US Dollar gains on Monday with the DXY above 105.50.
• The fundamental Greenback uptrend remains intact as the US economy continues to outperform other advanced economies.
• Key data releases this week include the US October CPI on Wednesday and Retail sales on Friday.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is broadly gaining in Monday's session. The focus for traders is now on the US inflation data for October, which will be released later this week. A strong inflation reading could further boost the US Dollar as it would increase expectations that the Federal Reserve (Fed) might slow the pace of interest rate easing.

The DXY initially rose last Friday after positive UoM consumer confidence data and the Federal Open Market Committee's (FOMC) announcement of a 25 bps rate cut. Despite concerns over easing labor market conditions, the Fed expressed optimism about economic growth. 

Daily digest market movers: US Dollar continues rising toward multi-month highs

• The fundamental US Dollar uptrend remains intact despite Trump's victory stalling the currency.
• The US economy is outperforming other advanced economies and is in a "sweet spot."
• The prospect of looser fiscal policy under Trump and limited Fed easing room point to a stronger Greenback.
• The US October CPI on Wednesday and Retail Sales on Friday, are this week's data highlights.
• There are also plenty of Fed speakers throughout the week including Chair Powell on Thursday.
• Growth remains solid in Q4 with the Atlanta Fed GDPNow model's estimate for Q4 GDP standing at 2.5% SAAR.
• The New York Fed's Nowcast model is tracking Q4 growth at 2.1% SAAR.

DXY technical outlook:  Bulls gather momentum but approach overbought conditions

The DXY index advanced above the key resistance at 105.50 on Monday, reaching levels last seen in July. This bullish move has been supported by technical indicators that remain in positive territory. 

However, the indicators are approaching overbought levels, suggesting that the index may be due for a correction in the near term. Traders should monitor the index closely to see if it can maintain its momentum or if it will pull back in the coming days.