US Dollar keeps lows near 97.70, CPI eyed

The greenback, in terms of the US Dollar Index, remains on the defensive during the first half of the week and it has now receded to the 97.70/65 band.

US Dollar attention to US CPI

The index is deflating from recent 7-month highs beyond the 98.00 barrier, extending the bearish note for the second consecutive session as the rally in the greenback seems to be running out of vigour.

Later in the NA session, USD will take centre stage in light of the release of inflation figures in the US economy measured by the CPI, along with the NAHB index and TIC Flows. Market consensus expects headline CPI to have risen at an annualized 1.5% and 2.3% stripping Food and Energy costs.

In the meantime, yields in the US money markets are bouncing off session lows after climbing to fresh multi-week tops in past sessions, reflecting the selling bias around the dollar.

Furthermore, USD speculative longs have reached the highest level since early February, taking net longs to fresh highs since mid-June during the week ended on October 11 and according to the latest CFTC report.

US Dollar relevant levels

The index is retreating 0.13% at 97.73 and a break below 97.47 (low Oct.12) would expose 96.40 (20-day sma) and finally 95.88 (200-day sma). On the upside, the next barrier aligns at 98.59 (high Mar.3) followed by 99.95 (high Jan.21) and the 100.60 (high Dec.3).