USD Index Consolidates as Mixed Economic Data Creates Uncertainty

The US Dollar Index retreated 0.2% to 103.50 as conflicting economic signals left traders uncertain about the Federal Reserve's next policy move. While January's ISM Services PMI surprised to the upside at 55.2 versus 53.5 expected, manufacturing data continued showing contraction at 47.8. The mixed picture has pushed back expectations for the Fed's first rate cut, with markets now pricing a 60% chance of easing by June rather than May. EUR/USD gained 0.3% to 1.0780, while AUD/USD climbed 0.5% to 0.6485 on respective domestic factors. Technical analysis shows the Dollar Index testing support at the 103.20 level, with resistance at 104.00. A break below support could accelerate losses toward 102.80, while recovery above 104.00 would signal renewed dollar strength. Traders await Friday's Non-Farm Payrolls for clearer direction.