Dollar Index Holds Above 100 After Soft CPI

The dollar's broader outlook remained supported by the relative strength of the US economy, traders said. The US is less exposed to energy shocks than other western economies, they said, and the greenback acts as a safe-haven asset. The recent ceasefire in the Middle East, which contributed to the softer inflation data, has since been undermined by renewed US-Iran conflict and the closure of the Hormuz strait, which could fuel inflation, traders said.

That dynamic may limit further dollar weakness as long as the price stays above 100, traders said. A close back above the broken trendline near 100.40 would signal a false break and point to a test of the 20-day moving average at 100.82.

The index settled at 100.25 on Friday.