The US dollar index has retreated for two consecutive days, following Jerome Powell's statement. The index is now waiting for the release of the US Consumer Price Index (CPI) data and retail sales data. The US dollar index pulled back ahead of the release of key economic data such as inflation, retail sales, industrial and manufacturing production, and housing starts. It is currently trading at $105.00, down from the year-to-date high of $106.52.

Jerome Powell, the head of the Federal Reserve, believes that the economy is doing well, but inflation is dropping at a slower pace than expected. The US published strong Producer Price Index (PPI) data, with the headline PPI rising from 1.8% in March to 2.2% in April, and core PPI rising from 2.1% to 2.4%. The closely watched CPI data is expected to reveal that inflation remained stubbornly above the Fed's target of 2.0% in April, due to rising energy, insurance, housing, and medical costs.

The US retail sales numbers will also provide more information about the health of the consumer. Economists expect the data to reveal that sales rose by 0.4% while core sales jumped by 0.2%. Retail sales have done well in the past few months, despite credit card interest rates jumping to the highest point in decades. Consumers have benefited from Buy Now Pay Later (BNPL) applications and rising wages.

The US dollar index will also react to the Philadelphia Fed manufacturing index, building permits, and housing starts numbers set for Thursday. The next catalyst for the DXY index will come from other countries, especially in Europe and Asia. Eurostat will publish the bloc's inflation numbers on Friday, which are expected to reveal that the headline CPI rose to 2.4% in April, while the core CPI moved to 2.7%.

The Eurostat will also release the second estimate of the GDP number on Thursday, which will confirm whether the bloc exited a recession. Recent data shows that countries like France and Germany are helping to lead the bloc's economic recovery. The US dollar index will also react to the latest Japan GDP numbers scheduled for Thursday, which will confirm that the world's fourth-biggest economy sunk into a technical recession in the first quarter.