US Dollar under pressure around 90.00

• The index is putting the key 90.00 handle to the test on Monday.
• Friday’s NFP showed labour market remains strong, wage inflation laggard.
• US CPI figures (Tuesday) and Retail Sales (Wednesday) salient events this week.

The US Dollar Index (DXY), which tracks the buck vs. its main competitors, has started the week on the defensive and is currently challenging the critical support at the 90.00 milestone.

US Dollar looks to risk trends, CPI

The index is grinding lower for the second session in a row on Monday, threatening to break below the psychological 90.00 support amidst the broad-based sentiment towards the riskier universe.

Friday’s US Non-farm Payrolls confirmed the solid pace of job creation (313K) and highlighted the uptick in the Participation Rate, although wage inflation lost traction from January’s strong advance, gaining 2.6% on a yearly basis during last month.

Softer Average Hourly Earnings seem to have poured cold water over a more aggressive interest rate path by the Federal Reserve and decelerated the prospects of higher inflation, all adding extra legs to the risk-on sentiment and therefore undermining extra gains in the buck.

On another direction, speculators trimmed their net shorts to the lowest level since January 16 during the week ended on March 6, as per the latest CFTC report.

In the US data space, inflation figures tracked by the CPI are due tomorrow while Retail Sales are expected on Wednesday, both being the salient events this week.

US Dollar relevant levels

As of writing the index is losing 0.22% at 89.93 and a break below 89.43 (low Mar.7) would open the door to 88.44 (low Jan.26) and finally 88.25 (2018 low Feb.16). On the other hand, the next hurdle lies at 90.57 (high Feb.8) seconded by 90.93 (high Mar.1) and finally 91.00 (high Jan.18).