The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, held firm above 107.00 on Friday after January Personal Consumption Expenditures (PCE) inflation data matched estimates, easing concerns over an unexpected spike in inflation.

The greenback held onto its recent gains as President Donald Trump reiterated that tariffs on Canada, Mexico and China will be implemented on March 4. Meanwhile, risk sentiment improved with US equity markets erasing earlier losses and moving higher.

Daily Market Movers Summary: US dollar holds firm after PCE report

The DXY hovered around 107.30, aiming to maintain its bullish momentum heading into the weekend.

The Trump administration confirmed that tariffs on Canada and Mexico will take effect on March 4, with China facing an additional 10% levy. January PCE inflation data met expectations with the monthly PCE at 0.3%, unchanged from the previous reading.

Core PCE was 0.3%, up from 0.2% in December, while annualized PCE was 2.6%, slightly beating expectations but in line with December's 2.6%. Core PCE came in at 2.6%, down from a revised 2.9% in December.

Also, the Chicago Purchasing Managers' Index (PMI) jumped to 45.5, beating consensus of 40.6 and improving from 39.5 in January.

On expectations, the CME FedWatch Tool indicated a 30% probability that the Federal Reserve will keep interest rates unchanged at 4.25%-4.50% in June, with the rest indicating a potential cut. On the foreign policy front, tensions have escalated between U.S. President Donald Trump and Ukrainian leader Volodymyr Zelenskyy over peace talks. Zelenskyy pushed back on U.S. promises on defense, while Trump accused him of being "disrespectful" in a heated public exchange. (Newsmaker23)

Source: FXstreet