Ella 
The U.S. dollar (USD) turned mildly bearish during the Asian session on Tuesday, still some distance from the lowest levels since February 2 hit last week. Meanwhile, the U.S. Dollar Index (DXY), which tracks the greenback against a basket of currencies, held above 103.00 points as traders awaited key U.S. macro data for clues on future policy decisions from the Federal Reserve (Fed).
U.S. economic data released on Tuesday include durable goods orders, the Conference Board Consumer Confidence Index and the Richmond Manufacturing Index. This will be followed by the release of preliminary US fourth-quarter gross domestic product data on Wednesday and the all-important US personal consumption expenditures (PCE) price index on Thursday. That could send new signals about the likely timing of the Fed starting to cut interest rates and help determine the dollar’s next direction.
At the same time, a new round of declines in U.S. bond yields put U.S. dollar bulls on the defensive for the second consecutive day, although the Fed’s hawkish expectations still constitute a “tailwind” for the U.S. dollar. Investors scaled back expectations for more aggressive easing from the Federal Reserve after newly released U.S. macro data showed inflation was firm and the economy remained resilient. In addition, minutes of the Federal Reserve meeting released last week and speeches by several Fed officials once again confirmed bets that the Fed will maintain higher interest rates for longer. This is therefore in favor of USD bulls.
Even from a technical perspective, the U.S. Dollar Index showed some resilience last week below the all-important 200-day simple moving average (SMA). Therefore, it would be prudent to wait for strong follow-through selling before confirming that the dollar has peaked in the near term and is poised to extend its recent pullback from the three-month high hit in early February this year.
