U.S. Dollar Index is losing ground as traders react to the weaker-than-expected Retail Sales report.

In a significant reaction to the latest economic data, the U.S. Dollar Index (DXY) is experiencing a downturn as traders reassess their positions following the release of the Retail Sales report for February. The report indicated a mere 0.2% increase in Retail Sales month-over-month, falling short of the anticipated 0.6% rise. This unexpected development has prompted a cautious approach among traders, with the DXY attempting to settle below the established support level of 103.20 - 103.40. Should this initiative prove successful, the index may face further declines, targeting the next support range of 102.00 - 102.20. Meanwhile, other currency pairs are absorbing the implications of this economic news. The EUR/USD has gained traction as traders pivot to focus on U.S. economic indicators, poised to breach the resistance levels of 1.0920 – 1.0935, pushing towards 1.1030 – 1.1050 if successful. On the other hand, the GBP/USD is making gains driven by weakening Treasury yields and the overall vulnerability of the dollar. If it manages to surge above 1.3000, it could reach new resistance levels at 1.3050 – 1.3070. The Canadian dollar appears stronger against its U.S. counterpart, as USD/CAD has retreated due to heightened demand for commodity-linked currencies. A decisive move below the 1.4300 may lead this pair toward the 1.4180 – 1.4200 support levels, and with the RSI leaning towards oversold territory, there is potential for additional downward momentum. Conversely, the USD/JPY is experiencing a stalemate as traders exhibit caution ahead of the upcoming Bank of Japan's interest rate decision on Wednesday. For signs of upward movement, the pair must securely establish itself above the 149.00 – 149.50 resistance range. On the geopolitical front, a high-stakes meeting between U.S. President Donald Trump and Russian President Vladimir Putin is set for Tuesday, which is expected to generate vast repercussions in the financial markets. Additionally, Germany is on the precipice of a vote for a €1 trillion spending package aimed at enhancing its defense sector, further adding to the dynamism of European markets. Looking forward, the markets are keenly awaiting the Federal Reserve's decision on interest rates and the accompanying statements from Fed Chairman Jerome Powell. As traders navigate these unfolding events, the U.S. Dollar Index finds itself within a trading range, caught between 103.18 and 103.99. With geopolitical risks looming large, a breakout—either up towards 105.00 or down toward 101.90—seems likely. This analysis has been reviewed and synthesized by artificial intelligence, offering an objective overview of the current financial landscape. Traders and investors should remain vigilant and consider the implications of domestic and international events on currency valuations, especially in light of potential volatility stemming from the Federal Reserve's forthcoming decisions and ongoing geopolitical tensions.