• US Dollar Index picks up bids to defend the latest recovery from the lowest levels since August.
• Russian missile struck a NATO member Poland and escalated war fears.
• Softer US data, risk-on mood previous favored DXY bears.
• Downbeat prints of US Retail Sales for October could weigh on prices amid talks of Fed’s pivot.

US Dollar Index (DXY) holds onto the late Tuesday’s rebound near 106.50, picking up bids from the intraday low, amid a risk-off mood during Wednesday’s Asian session. That said, headlines surrounding Russia and the market’s cautious sentiment ahead of the US Retail Sales for October appear to push back the bears around a three-month low.

Russia’s missiles struck Poland, a North Atlantic Treaty Organization (NATO) nation, and triggered fresh fears of war between Moscow and the West. Following that hit, global leaders criticized Moscow’s attempt and the NATO ambassadors called for an emergency meeting even if Russia's Defense Ministry denied claims of striking Poland.

Recently, Polish President Andrzej Duda told reporters, per Reuters, “Poland has no concrete evidence showing who fired the missile that caused an explosion in a village near the Ukrainian border.” The policymaker also added that it is very likely that they will activate NATO’s Article 4 on Wednesday

Previously, the downbeat print of the US Producer Price Index (PPI) for October, to 8.0% YoY versus market forecasts of 8.3% and the downwardly revised prior of 8.4%, favored DXY bears despite firmer prints of the Federal Reserve Bank of New York's Empire State Manufacturing Index for the said month. The reason could be linked to the comments from the Federal Reserve officials suggesting easy rate hikes going forward.

Additionally, an absence of major negatives from the Group of 20 Nations (G20) meeting in Indonesia and China’s readiness for more stimulus also exerted downside pressure on the US Dollar Index in recent days.

Amid these plays, Wall Street pared initial gains and the US Treasury yields rebounded from the intraday low. That said, the S&P 500 Futures print mild losses by the press time.

Looking forward, headlines from the NATO meeting will be important for the DXY. US Retail Sales for October, expected 1.0% versus 0.0% prior, will be more important considering the growing chatters of the Federal Reserve’s (Fed) pivot.

Technical analysis

Although the 200-DMA defends DXY bulls around 105.80, the recovery moves need validation from the previous support line from January, around 107.00 by the press time.