"However, the index could continue to see some downside risks after Friday's softer-than-expected inflation report reinforced the disinflation narrative and strengthened expectations for additional easing later this year. Forecasts now point to three rate cuts this year instead of two before the inflation data release. Momentum in the index will see Dollar pairs break through key levels of support and resistance, injecting life into trends."
"Treasury yields could follow the same path and could decline if new data strengthens expectations of more interest rate cuts. The 10-year yield slipped to its lowest level in roughly two months, while the 2-year yield declined to multi-month lows on Friday, reflecting growing confidence that policy may become less restrictive. Looking ahead, attention turns to the latest FOMC minutes and fourth-quarter GDP data later this week."
The dollar traded in a consolidation range amid thinner liquidity because US markets were closed for Presidents' Day. Friday's softer-than-expected inflation report reinforced a disinflation narrative and increased expectations for additional easing, shifting forecasts toward three rate cuts this year instead of two. Momentum could push dollar pairs through key support and resistance levels, renewing trends. Treasury yields may decline if incoming data strengthens prospects for more rate cuts; the 10-year fell to a roughly two-month low and the 2-year to multi-month lows. Markets are focused on FOMC minutes, fourth-quarter GDP, and Friday's PCE figures for confirmation of moderating price pressures.
Read at London Business News | Londonlovesbusiness.com
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