Looking ahead in this holiday-shortened week, economists at ING expect a firm US inflation print on Friday. They analyze the US Dollar (USD) outlook.

DXY can push up to the 105.00 area

Friday is a public holiday in many parts of the world but still features the key release of the week, the US core PCE deflator for February. There is a strong consensus behind a 0.3% month-on-month reading, which will not be good enough for the Fed's disinflation narrative. 

However, this week also sees quite a few Fed speakers. We would highlight the influential Christopher Waller speaking on Wednesday and Fed Chair Jerome Powell speaking on Friday We want to hear if the Fed has more to say about faulty seasonals making early-year inflation prints look too strong, a theme introduced by Chair Powell at last week's FOMC press conference.

A surging US stock market and the implications for US confidence and consumption make it hard to argue with the Dollar right now, warning that DXY can push up to the 105.00 area. But we continue to expect this strength to be temporary and would prefer to position for a second-quarter downtrend.