US Dollar steadies after in-line PCE data

• January's Personal Consumption Expenditures data aligned with expectations.
• President Trump confirms that tariffs on Canada, Mexico, and China will take effect on March 4.
• DXY is set to record a 0.60% weekly gain, holding onto Thursday's rally.

The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six major currencies, remains firm above 107.00 on Friday after January's Personal Consumption Expenditures (PCE) inflation data came in line with forecasts, easing concerns over unexpected inflation spikes.

The Greenback retains its recent gains as President Donald Trump reaffirms that tariffs on Canada, Mexico, and China will be implemented on March 4. Meanwhile, risk sentiment improves with US equity markets erasing earlier losses and moving higher.

Daily digest market movers: US Dollar holds firm after PCE report

• DXY hovers around 107.30, aiming to sustain its bullish momentum heading into the weekend.
• Trump administration confirms that tariffs on Canada and Mexico will take effect on March 4, with China facing an additional 10% levy.
• January's PCE inflation data met expectations with monthly headline PCE at 0.3%, unchanged from the prior reading.
• Core PCE at 0.3%, ticking up from December's 0.2%, while the annual headline PCE at 2.6%, slightly exceeding expectations but in line with December's 2.6%. Core PCE arrived at 2.6%, easing from a revised 2.9% in December.
• In addition, the Chicago Purchasing Managers Index (PMI) jumps to 45.5, surpassing the 40.6 consensus and improving from January's 39.5.
• Regarding expectations, the CME FedWatch Tool indicates a 30% probability that the Federal Reserve will keep rates unchanged at 4.25%-4.50% in June, with the rest pointing to potential cuts.
• On the foreign policy front, tensions rise between US President Donald Trump and Ukrainian leader Volodymyr Zelenskyy over peace deal negotiations.
• Zelenskyy pushes for more clarity on key terms, while Trump accuses him of being "disrespectful" in a heated public exchange.

DXY technical outlook: Holding steady with weekly gains

The US Dollar Index remains above 107.00, consolidating its 0.60% weekly gain after rebounding above the 100-day Simple Moving Average (SMA) at 106.60. Technical indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), signal mild recovery, but further bullish momentum is needed. Resistance is seen at 107.50, while support lies at 106.60 and 106.00, acting as key levels if selling pressure emerges.