• The index vacillates around the 104.50 region on Monday.
• US yields lack traction following Friday’s marked pullback.
• Factory Orders, short-term bill auctions next on tap.

The greenback, when gauged by the USD Index (DXY), alternates gains with losses in the mid-104.00s at the beginning of the week.

USD Index focuses on data releases, risk trends

The index starts the week in an inconclusive mood around the 104.50 zone, as investors seem to have digested Friday’s marked retracement against the backdrop of the absence of traction in US yields and some tepid improvement in the risk complex.

So far, the dollar appears side-lined above the 104.00 yardstick amidst renewed speculation that the Federal Reserve might not raise rates as high as previously thought despite the persistent hawkish narrative from Fed speakers.

According to CME Group’s FedWatch Tool, the probability of a 25 bps rate hike at the March 22 meeting remains the most likely outcome at 75%.

In the US data space, Factory Orders for the month of January will take centre stage followed by 3-month/6-month Bill Auctions.