Dollar Under Pressure Ahead of Inflation Data and Fed Communication

The US dollar is under pressure as markets await key inflation data and upcoming Federal Reserve communication. The dollar index, or USDX, has been trading near a three-month low of around 98.89, with traders weighing their expectations for future Fed policy adjustments against ongoing concerns about US fiscal conditions and broader demand for dollar assets.

The market is focused on the upcoming US PCE inflation report and Federal Reserve Chair Kevin Warsh's Jackson Hole speech, which could provide clues on the future path of interest rates. The US10YR futures chart shows Treasury prices have moved lower in recent months, implying higher yields, but USDX has not strengthened alongside this move.

The technical analysis suggests that USDX is testing the 98.99 200-day SMA, with key short-term levels at 99.50 resistance and 98.50 support. A sustained move above 99.00-99.20 would suggest buyers are defending the long-term trend level, while continued weakness below the moving average would keep pressure on the broader structure.