US Dollar consolidates near 1-month tops, just below mid-97.00s ahead of US CPI

   “¢   Rebounding US bond yields/US-China trade optimism extend some support.
   “¢   Risk-on mood/recovering British Pound keep a lid on any meaningful up-move.
   “¢   Today’s key focus will be on the latest US consumer inflation figures for Nov.

The US Dollar Index (DXY) seesawed between tepid gains/minor losses and consolidated overnight gains to near one-month tops.

On Tuesday, the greenback managed to regain positive traction following the release of stronger than expected US core PPI figures, showing that a measure of wholesale inflation remained elevated at 2.8% in November. The buck extracted some additional support from overnight reports that China was considering cutting import tariffs on American-made cars to 15% from the current 40%.

However, a combination of diverging forces failed to provide any fresh impetus and led to a subdued/range-bound price action through the mid-European trading session on Wednesday. The US Treasury bond yields staged a goodish rebound from three-month lows and extended some support, though a modest recovery in the British Pound and the prevalent risk-on mood kept a lid on any meaningful up-move.

Traders also seemed reluctant to place any aggressive bets ahead of today’s key release of the latest US consumer inflation figures for November, due later during the early North-American session. The data might influence market expectations over the Fed’s monetary policy outlook for 2019 and any strong signals of easing inflationary pressure might prompt investors to price in a possible pause in the rate hike cycle and eventually prompt some fresh selling.

Technical levels to watch