The US Dollar (USD) is experiencing a pullback after Wednesday’s surge driven by hot US Consumer Price Index (CPI) figures. The retreat followed the release of March Producer Price Index (PPI) data, which came in line with forecasts, easing concerns about near-term inflation pressure.

Focus Shifts to ECB Meeting and Fed Officials

Market attention now turns to the European Central Bank (ECB) meeting. ECB President Christine Lagarde’s comments may provide further insight into the bank’s rate path. Additionally, statements from New York Fed President John Williams and Boston Fed President Susan Collins could impact market expectations for Fed policy. Any pushback against recent aggressive rate hike projections could fuel further USD correction.

Technical Analysis: DXY Snaps Above 105.00, Eyes Further Upside

The US Dollar Index (DXY) breached the key 105.00 level for the first time this year, setting a fresh five-month high near 105.32. As the Fed may maintain higher rates for longer than other major central banks, the widening rate differential supports further USD strength.

Key upside targets include:

• November 10th high at 106.01
• 107.00 psychological level
• October 3rd high at 107.35

Potential support levels:

• 105.00 psychological level
• 104.60
• Confluence of 55-day and 200-day Simple Moving Averages (SMAs) near 103.97/103.84