The outlook for the US Dollar dims as it retraces Tuesday’s advances.

• The US Dollar shifts its sentiment and declines on Wednesday.
• Wednesday’s economic calendar is quite light.
• The US Dollar Index trades below 103.00 following a false breakout on Tuesday.

The US Dollar (USD) is showing a decline now that the dust has settled on the slightly higher-than-expected US Consumer Price Index (CPI) data, raising uncertainties about the Federal Reserve’s (Fed) timing for interest rate cuts. Following an initial uptick after the CPI data release, the dollar surrendered half of its gains on Tuesday amid a rally in US equities. As of Wednesday, the DXY US Dollar Index remains steady and appears poised to end the day above 103.00, barring any unforeseen developments during the US trading session.

In terms of economic data, the upcoming calendar is quite sparse, with no significant events scheduled. However, on a political note, it’s worth mentioning that both current US President Joe Biden and former US President Donald Trump secured enough votes in the Primaries on Tuesday to confirm their presidential nominations. Consequently, November 5 will see a rematch from four years ago.

USD Technical Analysis:

Even if the US Dollar Index (DXY) is up for the third day in a row this week, traders won’t be celebrating the gain because the CPI print did not significantly affect the DXY. Now that there has been a strong rejection even ahead of the 55-day Simple Moving Average (SMA), it is unclear what will spur the US Dollar to continue rising for several days while a number of economic indicators continue to weaken.

On the plus side, the first support level is located at the 55-day SMA, or 103.34, and the 200-day SMA, or 103.71. The 100-day SMA is rising at 103.72, indicating a little double cap in that area, once it is broken through. The crucial level on the topside continues to be 104.96, depending on the stimulus that drives the DXY higher.

After the CPI report, the DXY was unable to even test or contest the 55-day SMA. With 102.00 up next, it appears that more fall is inevitable and has some significant significance. After passing that point, there is still a leg left down to 2023’s low of 100.61.