FOMC minutes, US CPI events are weighing on the US Dollar.

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• FOMC minutes, US CPI events are weighing on the US Dollar.
• US Dollar bears are in the market and eye a break of temporary support.
• Bulls look for commitments for a correction from support.

At 101.469 DXY, the US Dollar is being pressured on Wednesday following the Consumer Price Index (CPI) that increased in March at a slower-than-expected pace and minute from the FOMC´s March 21-22 meeting whereby the rate hike was widely viewed as dovish. DXY has dropped from a high of 102.15 to a low of 101.449 on the day so far.

The FOMC minutes showed that the staff at the Committee are forecasting a mild recession later in 2023 but also noted that wage growth was still well-above rates consistent with the 2% inflation target.

As for the inflation data, the report showed the prices urban consumers pay for a basket of goods and services increased by 0.1% from the previous month and 5.0% year-on-year, landing below consensus expectations of 0.2% and 5.2%, respectively.

But the core measure came in hot. This measure strips out volatile food and energy prices and was posting a month-on-month gain of 0.4%, and 5.6% on an annual basis, 10 basis points hotter than the February print.

Nevertheless, Fed funds futures traders are pricing in 69% probability that the Fed will raise rates by an additional 25 basis points at its May 2-3 meeting, down from around 76% before the data. This is sending the US Dollar lower on the day and into technical support as follows:

The bias is to the downside while the index is on the front side of the bearish trend and considering the strong daily bearish impulse from the 78.6% Fibonacci retracement level.

However, there are prospects of a correction on the lower time frames from the support area as illustrated above.

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