Anna 
In the initial hours of European trading on Tuesday, the U.S. dollar experienced a marginal decline, reflecting a minor uptick in risk sentiment, while maintaining narrow trading ranges ahead of the imminent release of crucial inflation figures.
As of 04:25 ET (08:25 GMT), the Dollar Index, gauging the dollar’s performance against a basket of six major currencies, recorded a 0.2% dip, settling at 104.410. This retreat follows last week’s robust gains, as market participants resumed trading activities following holidays observed in the U.K. and the U.S.
The dollar’s modest slip precedes the forthcoming release of the U.S. core personal consumption expenditures (PCE) price index report, slated for Friday. The PCE index stands as the Federal Reserve’s preferred gauge of inflation, rendering this data release of utmost importance for market participants.
Given the significant role of U.S. interest rate expectations in recent currency movements, traders eagerly await insights into the anticipated pace and magnitude of potential rate adjustments throughout the year.
Forecasts suggest that the core PCE index is anticipated to exhibit minimal fluctuations on a monthly basis. This projection aligns with the prevailing sentiment among investors, who are increasingly embracing the notion of a protracted period of elevated interest rates, as evidenced by last week’s Federal Reserve minutes and cautious remarks from various policymakers.
Throughout the week, investors will have the opportunity to glean insights from several key figures within the Federal Reserve, including Governor Michelle Bowman, Cleveland Fed President Loretta Mester, Governor Lisa Cook, New York Fed President John Williams, and Atlanta Fed President Raphael Bostic.
Moreover, the economic agenda for the week encompasses revised data on first-quarter economic growth scheduled for Thursday, along with the release of the Fed’s Beige Book on Wednesday. These events are expected to further shape market sentiment and guide currency movements as traders navigate evolving economic indicators and central bank rhetoric.
