The US Dollar is maintaining a steady position on Friday following the US Personal Consumption Expenditures (PCE) data for January, which met expectations. The US Dollar Index (DXY) is closing the week around 107.30, attempting to sustain this level amid ongoing tariff confirmations from US President Donald Trump.

PCE data showed the January monthly headline at 0.3%, unchanged from previous figures, while core PCE rose to 0.3% compared to 0.2% in December. The overall PCE year-on-year increased to 2.6%, slightly above the expected 2.5%.

The Chicago Purchasing Managers Index for February surged to 45.5, exceeding the forecast of 40.6 and improving from January’s 39.5. Equities in the US are moving higher, contrasting with declines in Asian and European markets.

The Federal Reserve’s monitoring of economic conditions influences US monetary policy. Interest rates are adjusted based on inflation and employment levels, with current forecasts showing a 29.7% chance of rates remaining unchanged in June.

Technical analysis of the DXY indicates the importance of maintaining support around 107.00. Resistance levels include the 55-day Simple Moving Average at 107.97 and a breakthrough above 108.00 could lead toward 108.50. Conversely, nearby support levels include 106.80 and 106.52.

These recent developments provide traders with a clear indication of the current dynamics at play. With PCE inflation figures aligning with forecasts, the Federal Reserve is unlikely to see any immediate reason to shift its stance. Some had anticipated a softer reading, so inflation holding steady at expected levels reinforces the argument that rate cuts may still be some distance away.

January’s report showed that headline PCE rose 0.3% on a monthly basis, unchanged from the previous figure. Core PCE, which strips out food and energy, ticked higher to 0.3% after sitting at 0.2% in December. The annual increase pushed to 2.6%, just slightly beyond the expected 2.5%. While this isn’t a cause for alarm, it does suggest inflation remains stubborn enough to justify the Federal Reserve’s patient approach.

Another data point that caught attention was the Chicago PMI, which came in at 45.5—well above both the expected 40.6 and the prior month’s 39.5. This suggests that despite broader global concerns, certain aspects of the US economy continue to show resilience, particularly in manufacturing. Meanwhile, equities have pushed higher in the US, in stark contrast to the declines seen in Asian and European markets. The divergence reflects the strength of American economic data relative to other regions, as well as some rotation out of international stocks and into US markets.

The Federal Reserve’s stance remains data-dependent, as officials carefully balance incoming reports. At the moment, market expectations suggest only a 29.7% chance that interest rates will stay unchanged in June. This tells us that traders still lean toward an eventual reduction but see little reason to expect an imminent shift. If inflation readings hold near their current levels in the coming months, the likelihood of rate adjustments will continue to evolve.

For currency traders, the current price movements in the US Dollar Index highlight key technical levels worth watching. Support remains near 107.00, which traders will be monitoring to see if buyers step in again. If the index loses that level, 106.80 and 106.52 become the next logical areas to test. On the upside, the 55-day Simple Moving Average sits at 107.97, just shy of 108.00. A move higher through that threshold could open the way toward 108.50, something momentum traders will be paying close attention to.

Stability in the dollar has come despite ongoing discussions on trade tariffs. The recent confirmations from Donald have kept investors on alert, as shifts in US trade policy could have currency implications. While the immediate effect on the dollar has been muted, future developments must be monitored closely.