US Dollar edges mildly lower on soft CPI revisions, closes a winning week

• The DXY stands at 104.15 on Friday with mild losses.
• US December’s inflation figures were downwardly revised by the BLS.
• Next week January’s CPI is due.

The US Dollar (USD) stood flat on Friday, with mild losses, closing a winning week but trimming most of its gains. All eyes are on next week’s US inflation data.

The US Dollar gathered significant ground in the first days of February after Jerome Powell, the Chair of the US Federal Reserve (Fed), mentioned that a reduction in interest rates in March seemed improbable. He emphasized the necessity for further proof of declining inflation before the Fed could feel confident about lowering rates, so incoming data will be key. Next week, the US will release Consumer Price Index (CPI) figures from January, which will likely set the pace of the Greenback for the short term. 

Daily digest market movers: US Dollar loses some ground on soft CPI revisions

• The US Bureau of Labor Statistics (BLS) updated the Consumer Price Index (CPI) figures with new seasonal adjustments, lowering December's inflation rate to 0.2% from the initial 0.3%.
• The Core CPI for December remained steady at 0.3%, with no revisions made.
• November's CPI was adjusted upwards to a 0.2% increase from the previously reported 0.1%, while October's 0.1% rise was unchanged.
• According to the CME FedWatch Tool, the odds of a cut in March are low at around 20% but may see some changes in case the US CPI from January comes in lower than expected.

Technical analysis: DXY bulls struggle, continue battling with 100-day SMA

On the daily chart, the Relative Strength Index (RSI) is flat, situated in positive territory, which generally suggests a stall in buying momentum but still maintains a generally bullish tilt. Coupled with the Moving Average Convergence Divergence (MACD), which shows flat green bars, it confirms the trend of bullish momentum yet hints at a possible consolidation or minor pullback.

On a wider horizon, Simple Moving Averages (SMAs) provide a mixed picture. The index is trading above the 20-day SMA, a clear signal of short-term bullish strength. However, it remains below the 100-day SMA, indicating that the medium-term selling pressure persists. Interestingly, it holds above the 200-day SMA, underscoring a strong bullish presence in the long run. 

This confluence of factors paints a picture of bulls struggling to gain substantial ground, which leaves the index vulnerable for further downside if the bulls don't wake up.