The USD is looking prone to more losses in broad terms with the DXY again struggling to extend much above the 103.50 area – the point I highlighted at the start of the week that the index would need to extend through to rally.

US Personal Income is forecast to rise 0.3% in December, with Spending up 0.5% in the month. The core PCE deflator is expected to drop back to 3.0% YoY, from 3.2% in November, however.

Signs of slower inflation will add to market bets that the Fed will be thinking a bit harder about rate cuts in the coming months. Soft data may see the USD slip a little but I’m not yet inclined to rule out a further extension of the USD’s early 2024 rebound.

DXY support is 102.75.