Dollar Bounces Ahead as PPI and CPI Loom

The US dollar has been falling sharply, but technical indicators suggest it may be due for a rebound.

With the release of producer and consumer price indices (PPI and CPI) this week, along with an ECB meeting, traders are waiting for potential catalysts that could lead to a near-term bounce in DXY.

The PPI and CPI reports may show early signs of oil-driven inflationary pressure, but much of the impact from crude oil price gains will not be reflected until next month's reports.

A modest upside surprise in either index could provide an excuse for a near-term rebound in DXY, especially given that futures traders remain heavily long the US dollar.