US Dollar slips ahead of packed week

• The DXY index declines to 105.60, still consolidating last week’s gain.
• US October’s headline CPI is expected to have decelerated, and the core measure remains stagnant.
• The economic docket features no relevant high-tier reports on Monday.

The US Dollar (USD) slides on Monday with the DXY index,  which measures the value of the US Dollar versus a basket of global currencies, falling to 105.60 on the back of declining US bond yields and investors taking profits from last week’s gains. Focus now shifts to Tuesday’s Consumer Price Index (CPI) data from October and Retail Sales figures from the same month on Wednesday.

Even though the United States labor market has started to show signs of weakness, several Federal Reserve (Fed) officials, including Chair Powell, hinted that the work on inflation isn’t done and opened the door for further monetary tightening. In that sense, as the central bank remains data-dependent, high-tier data will shape the decision of the Fed's last meeting in December. For now, according to the CME FedWatch Tool, the odds of a hike are low, near 10%, but swaps markets seem to be delaying interest rate cuts from May to June.

Daily Digest Market Movers: US Dollar flattens, consolidating weekly gains

• The US Dollar Index stands around 105.60 for a 0.20% loss.
• Markets await next week’s Consumer Price Index (CPI) figures from October in the US.
• Headline CPI is expected to decline to 3.3% YoY, while the core measure is forecasted to remain at 4.1% YoY.
• Retail Sales are expected to have contracted by 0.3% in October.
• US Treasury yields have edged higer on Monday, while the 2-year rate declined to 5.04%.
• According to the CME FedWatch Tool, the odds of a 25-basis-point hike in December are extremely low, below 10%. 

Technical Analysis: US Dollar consolidates as bulls take a breath

The daily chart suggests that the DXY Index holds a neutral to bullish technical bias as charts show a brief consolidation period, indicating that the bulls are catching their breath after a gaining week. The Relative Strength Index (RSI) indicates a neutral stance below its midline, displaying a flat slope in negative territory, while the Moving Average Convergence (MACD) displays neutral red bars.

Evaluating the broader scale technical outlook, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, suggesting that the bulls are in control on the broader time horizon but still need to put in extra effort to assert dominance in the short run. 

Support levels: 105.50,105.30, 105.00.
Resistance levels: 106.00, 106.05 (20-day SMA), 106.30.