The US Dollar (USD) is trading flat on Tuesday as the US trading session gets underway. This follows a similar pattern from Monday, reflecting a cautious market sentiment.

• Risk Premium Rises on Geopolitical Tensions: The potential for a ground invasion of Rafah by Israel and increased border control by Egypt are prompting some risk aversion, leading to a slight boost for the USD.
• Support from Weaker AUD/USD and USD/JPY: Recent declines in the Australian Dollar and Japanese Yen initially supported the USD, but these gains are fading.
• US Economic Data and Fed Speakers in Focus: Today’s key events include the US Redbook Index and the TechnoMetrica Institute’s Economic Optimism data. Minneapolis Fed President Kashkari is the only scheduled Fed speaker.
• Senior Loan Officer Survey Shows Tightened Lending: The release of the SLOOS highlighted continued tight lending standards and rising consumer delinquencies.

Technical Analysis: DXY at a Crossroads

• The US Dollar Index (DXY) edged higher on Tuesday after closing above 105.00 on Monday.
• A break above 105.52 (a key level since April 11th) could signal further upside for the DXY, potentially targeting 106.00 or even 106.52 (April 16th high).
• Conversely, a decline below the 55-day and 200-day SMAs (Simple Moving Averages) at 104.54 and 104.25, respectively, could indicate weakness.

The USD’s near-term direction hinges on upcoming economic data, geopolitical developments, and the Fed’s monetary policy stance.