[MARKET ANALYSIS] DXY lacks direction, EUR moves a touch lower on cooler-than-expected inflation report

DXY lacks direction, and holds within a 100.30-100.64 range; the peak for today was made overnight, but then sank from these levels on reports via the WSJ which suggested that US President Trump told aides he's willing to end the war without reopening Hormuz. A factor which clearly indicates some early signs of easing tensions, though raises concerns regarding the future governance of the Strait itself. DXY swung from peaks to troughs within an hour of the report, before then gradually pushing back towards the mid-point of the aforementioned range, as the European session got underway.
Focus from a US standpoint now turns to US JOLTS, which are expected to ease to 6.87mln (from 6.946mln). A slew of Fed speakers are also on the docket, including Bowman, Barr, Goolsbee and Schmid.
G10s are mixed against the USD. GBP is the marginal outperformer, potentially benefiting from the lower energy prices – which somewhat alleviates growth-related concerns, at least, for now. Sticking on the growth front, Final UK GDP growth in Q4 printed 1% Y/Y (exp. 1%, prev. 1.2%) – a report which spurred no move in Cable. To the bottom of the pile reside the CHF and Kiwi, albeit, losses are incremental at this stage. Elsewhere, EUR is steady, and was little moved to a resilient German jobs report, whilst a cooler-than-expected EZ inflation metric spurred some pressure in the single currency. In a bit more detail, headline Y/Y jumped to 2.5% (prev. 1.9%) and a touch beneath the consensus. As is the case across Europe, the surge in inflation has been attributed to the recent strength in energy prices; for reference, the core figure actually cooled from the prior to 2.3% (prev. 2.4%). EUR/USD fell to 1.1462 post-day before scaling back a touch. The ECB will welcome this report, given it favours a “wait and see approach”.
JPY is flat this morning, after relative outperformance in the prior session, spurred by jawboning. USD/JPY currently resides within a 159.48-159.97 range, and towards the lower end of the prior day’s session. Overnight, the release of softer-than-expected Retail Sales and slower Tokyo inflation had limited impact on the JPY – ING opines that the inflation figure will not “deter BoJ’s April hike”; analysts opine that the trifecta of 1) surging oil prices, 2) weak JPY and 3) rising Shunto wage growth, all play in favour of a near-term hike. Attention now turns to the Tankan survey on Wednesday, a report which policy members brought to focus at the last BoJ confab.