US Dollar trades neutral while the US commemorates Presidents’ Day

• The DXY Index is mildly up on Monday’s session.
• No relevant data was released during the session and American traders celebrate Presidents’ Day.
• The FOMC January minutes will be the highlight.

The US Dollar (USD) measured by the Dollar Index (DXY) stands neutral around 104.30 with American traders on the sidelines celebrating the US Presidents’ Day and markets digesting the Producer Price Index (PPI) data from last Friday.

Amid rising headline and core PPI, the US Dollar Index may see further upside as the hot inflation figure from January may cause the Federal Reserve to retain a cautious stance and. This week's focus will be on the Federal Open Market Committee (FOMC) minutes, and several Federal Reserve (Fed) officials will be on the wires in the next few sessions.

Daily digest market movers: The US Dollar stands flat as markets digest last week’s data

• Last week, the US reported that Retail Sales and Industrial Production declined in January.
• The PPI from the same month, however, came in higher than expected.
• Markets await fresh drivers to continue timing the start of the Fed’s easing cycle. FOMC’s January meeting minutes are due on Wednesday.
• With eyes on the Federal Reserve's next steps, the drop in odds for a March cut to 20% as per CME FedWatch Tool is a significant shift. The probabilities of a cut in May stand at 33% as markets seem to have pushed the start of easing to June.

Technical analysis: DXY bulls struggle to gain ground, must defend 100-day SMA

On the daily chart, the Relative Strength Index (RSI) is exhibiting a flat position within positive territory. This signifies that the buying momentum in the market is slowing and a balance is being achieved between the buying and selling forces. However, this flat position might also mean that the bulls are taking a breather after a strong run.

The Moving Average Convergence Divergence (MACD) histogram shows decreasing green bars. This indicates that bullish strength is losing steam and that bears might soon gain the upper hand. While bullish momentum is slowing, it doesn't illustrate a full-blown bearish takeover but rather a weak bearish bent.

On a broader scale, the Simple Moving Averages (SMAs) are giving a brighter picture. With the index trading above the 20, 100 and 200-day SMAs, it suggests that the bulls have managed to remain in control over longer periods.

However, the prevailing dynamic suggests that bulls are struggling to gain further ground. This corroborates the MACD and RSI signals pointing toward decelerating buying momentum. Thus, in the short-term, sellers may have the upper hand, giving way to a potential bearish tilt in the market, while the long-term outlook remains positive.