Gaurav Kashyap

The ECB president Mario Draghi has had the luxury of an improving euro-zone data docket, which has seen hawkish sentiment rise.

Since we last spoke, the US Dollar index has sold off more than 2.5 per cent.

The US dollar is expected to remain in the current range, between 97.86 and 100.50 levels, in the lead up to June’s FOMC meeting.

With the financial markets for the most part awash with so much optimism in the past week or so, the dollar index and gold remained squarely on the back foot.

Several notable events made for high volatility in the first quarter of the year.

Until there is more clarity from Donald Trump’s policy on his proposed tax cuts and future fiscal policy, the Fed will continue to maintain this non-committal tone, which will keep markets trading sideways with no clear trend forming.

This could be the last final big push in the dollar rally before the federal open market committee (FOMC) convenes next Wednesday.

With a shift in the US Federal Reserve’s rhetoric to be more price-focused, markets took the better than expected inflation data as a positive for the dollar, which kick-started a mini bullish move for the Dollar Index.

Donald Trump has been outspoken on the value of the dollar, calling out its strength in comments to The Wall Street Journal, in which he said the dollar was already "too strong".

Markets will take US president-elect Donald Trump’s state of the nation speech on January 20 as an opportunity to look deeper into his fiscal and monetary policies.

While sterling's 2016 weakness would be expected, the economic data from the UK showed resilient growth figures following the vote to leave the European Union. The lag in the data will diminish with the real effects coming into fruition in 2017.

It was the US Federal Reserve’s hawkish stance regarding the outlook for interest rates that perhaps lent weight to a more bullish US dollar.

Numbers from the US show signs of strength, reinforcing the view that the Federal Reserve will raise interest rates at its next meeting.

Expectations are mounting for a US rate hike, which now sits at 81.1 per cent.