The US Dollar Index (DXY) has refreshed its day’s high at 102.21 as investors’ expectations are highly skewed toward hawkish Fed policy. As per the CME Fedwatch tool, 66% of bets are in favor of a 25 basis point (bp) rate hike from Fed chair Jerome Powell.

Going forward, Wednesday’s US Inflation data will be keenly watched. Headline inflation is expected to see further softening as oil prices have remained lower in March, however, the core Consumer Price Index (CPI) that strips off of oil and food prices would rebound amid higher labor cost index data. Tight labor market conditions in the US economy left no other option for firms other than offering higher payouts to retain talent. Therefore, households were handed higher funds for disposal.

On the Eurozone front, Retail Sales data will be keenly watched. Monthly Retail Sales (March) are expected to contract by 0.8% vs. an expansion of 0.3% recorded in February. And annual Retail Sales would contract further to 3.5% from a prior contraction of 2.3%.

This might delight the European Central Bank (ECB) but is not sufficient to back a neutral stance for THE upcoming monetary policy meeting.