The US dollar index held steady above 97, with the market focused on the US CPI and the Federal Reserve's interest rate outlook.
2026-02-13 11:04:09
On Friday during Asian trading hours, the US dollar index (DXY) was around 97.00, remaining positive for the third consecutive trading day. Recent strong US non-farm payroll data, coupled with a low unemployment rate, has weakened market expectations for a near-term interest rate cut, thus providing support for the dollar.
Market focus is now shifting to the US January Consumer Price Index (CPI) data. Overall inflation is expected to fall to 2.5% from 2.7%, while core inflation is projected to decline to 2.5% from 2.6%. If the actual data is lower than expected, it will provide the Federal Reserve with room to resume interest rate cuts later this year.
Investors are also watching for potential adjustments to Federal Reserve policy. Stephen Milan pointed out that monetary policy has tightened naturally, suggesting there is still room for rate cuts, and noted that adjusted inflation is close to the target and the labor market still has some slack, providing room for policy support.
The market has already priced in the Fed's interest rate path in 2026. CME FedWatch data shows that the probability of keeping interest rates unchanged at the next meeting has risen to 91%, up from 77% last week. The market is still pricing in the possibility of two rate cuts this year, with the first cut likely to occur in the second half of the year.
Investors are also watching the potential impact of Kevin Warsh's expected appointment as Federal Reserve Chairman in May on balance sheet policy. Warsh has previously criticized asset purchases, but recent signals suggest he may support coordination with the Treasury to lower yields.
Furthermore, the global oil market faces expectations of oversupply. The International Energy Agency projects that global crude oil supply will exceed demand by 3.7 million barrels per day in 2026 and has lowered its global oil demand forecast, further impacting commodity currencies, primarily those related to crude oil, and the US dollar.
The US dollar index maintains a slightly bullish trend on the daily chart, holding above the 97 level. Short-term moving averages are in a bullish alignment, indicating continued upward momentum. Key support levels are at 96.80 and 96.50; a break below these levels could test the 96 psychological level. Resistance levels to watch are 97.50 and 98.00; a break above these levels could open up further upside potential.
The 4-hour chart shows that the DXY is consolidating within the 96.90-97.20 range, with the bulls and bears currently in equilibrium. The RSI is slightly bullish but close to neutral, and the MACD histogram is expanding moderately. Short-term direction is highly dependent on CPI data and market interpretation of the Federal Reserve's policies.
Editor's Note:
The US dollar index is biased towards strength in the short term, but remains data-driven. Ahead of the CPI release, the dollar may consolidate; a break above resistance could lead to a rapid rise, while a breach of support could result in a pullback to support levels.
We will focus on inflation data and potential policy adjustments by the Federal Reserve, including the timing of interest rate cuts and balance sheet operations, to determine the next phase of the dollar's trajectory. Meanwhile, expectations of a global oil supply glut may increase volatility for the dollar and related commodity currencies.
Market focus is now shifting to the US January Consumer Price Index (CPI) data. Overall inflation is expected to fall to 2.5% from 2.7%, while core inflation is projected to decline to 2.5% from 2.6%. If the actual data is lower than expected, it will provide the Federal Reserve with room to resume interest rate cuts later this year.
Investors are also watching for potential adjustments to Federal Reserve policy. Stephen Milan pointed out that monetary policy has tightened naturally, suggesting there is still room for rate cuts, and noted that adjusted inflation is close to the target and the labor market still has some slack, providing room for policy support.The market has already priced in the Fed's interest rate path in 2026. CME FedWatch data shows that the probability of keeping interest rates unchanged at the next meeting has risen to 91%, up from 77% last week. The market is still pricing in the possibility of two rate cuts this year, with the first cut likely to occur in the second half of the year.
Investors are also watching the potential impact of Kevin Warsh's expected appointment as Federal Reserve Chairman in May on balance sheet policy. Warsh has previously criticized asset purchases, but recent signals suggest he may support coordination with the Treasury to lower yields.
Furthermore, the global oil market faces expectations of oversupply. The International Energy Agency projects that global crude oil supply will exceed demand by 3.7 million barrels per day in 2026 and has lowered its global oil demand forecast, further impacting commodity currencies, primarily those related to crude oil, and the US dollar.
The US dollar index maintains a slightly bullish trend on the daily chart, holding above the 97 level. Short-term moving averages are in a bullish alignment, indicating continued upward momentum. Key support levels are at 96.80 and 96.50; a break below these levels could test the 96 psychological level. Resistance levels to watch are 97.50 and 98.00; a break above these levels could open up further upside potential.
The 4-hour chart shows that the DXY is consolidating within the 96.90-97.20 range, with the bulls and bears currently in equilibrium. The RSI is slightly bullish but close to neutral, and the MACD histogram is expanding moderately. Short-term direction is highly dependent on CPI data and market interpretation of the Federal Reserve's policies.
Editor's Note:
The US dollar index is biased towards strength in the short term, but remains data-driven. Ahead of the CPI release, the dollar may consolidate; a break above resistance could lead to a rapid rise, while a breach of support could result in a pullback to support levels.
We will focus on inflation data and potential policy adjustments by the Federal Reserve, including the timing of interest rate cuts and balance sheet operations, to determine the next phase of the dollar's trajectory. Meanwhile, expectations of a global oil supply glut may increase volatility for the dollar and related commodity currencies.
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