US Dollar trades mildly up in quiet Wednesday

• Fed's stance over inflation signals caution, not panic, over higher inflation projections.
• Investors await incoming data to form further expectations on the timing of the easing cycle.
• PCE figures for February are due on Friday, and will be key to Greenback price action.

The US Dollar Index (DXY) is currently trading with mild gains at 104.3, a level close to Friday's peak of 104.50. Investors seem to be on the sidelines as they wait for fresh drivers to place their bets on the timing of the Federal Reserve’s (Fed) easing cycle.

That being said, the Federal Reserve appeared less aggressive last week, adopting a cautious approach toward the easing cycle that's anticipated to start in June. This stance comes after an upward revision of inflation projections and reassurances from Chair Jerome Powell that the bank will avoid overreacting to two months of high inflation figures. However, the US Dollar managed to clear all the post-Fed losses, mainly as the US economy holds resilient.

Daily digest market movers: DXY mildly higher as investors prepare for PCE data

• Statements from Fed speakers are under focus after the FOMC meeting, Waller will be on the wires later in the session.
• According to the CME FedWatch Tool, the odds of easing starting in June stand near 60%.
• The headline Personal Consumption Expenditures (PCE) is expected to have risen by 2.5% YoY, while the core measure is seen coming in at 2.8%. The outcome of the Fed’s preferred gauge of inflation will dictate the pace of the USD for the short term.
• US Treasury bond yields are falling, with the 2-year yield standing at 4.56%, the 5-year yield at 4.19%, and the 10-year yield at 4.20%.

DXY technical analysis: DXY is under bulls control while indicators flatten

The Relative Strength Index (RSI) is currently reflecting a flat position in positive territory, which indicates stable buying pressure. The Moving Average Convergence Divergence (MACD) shows flat green bars, suggesting that buying momentum remains intact. Furthermore, the placement of the index above its 20, 100 and 200-day Simple Moving Averages (SMAs) confirms the long-term bullish bias.

The flatness of the indicators comes after a 1% winning week, which may push the Index into a consolidation phase as investors await new fundamental drivers. In the meantime, if the Index holds above its main SMAs, the outlook will be bright.