The US Dollar found some support following statements by Fed Vice Chairman Philip Jefferson advocating for a prolonged period of rate stability. Jefferson's remarks injected a semblance of confidence into the markets, steering the trajectory of the greenback amidst a landscape ripe with anticipation for key economic data releases. However, expectations about dovish surprise in Wednesday CPI data gained upper hand, forcing USD to cede ground against its major peers:

Forecasts depict a moderated annual headline CPI of 3.4%, slightly tapering from March's 3.5%. Concurrently, core inflation, excluding volatile food and energy prices, is anticipated to decelerate to 3.6% from the preceding 3.8%. Market expectations sway towards a subdued monthly growth rate for both headline and core CPI, estimated at 0.3%, down from the previous reading of 0.4%.

Navigating the realm of the US Dollar Index (DXY) requires a nuanced understanding of evolving scenarios, with markets weighing three distinct trajectories. The prevailing sentiment entertains the likelihood of a softer USD, with stagflation or a resurgence in disinflation presenting compelling narratives. Stagflation, characterized by waning economic growth alongside sustained inflation, poses challenges for the Fed, potentially limiting its capacity to lower interest rates to cushion economic downturns. Conversely, a resurgence of disinflation trends could reignite discussions of rate cuts, offering a pathway towards a soft landing. Conversely, a robust economic performance coupled with elevated inflation could reinforce the USD, signaling the potential for further rate hikes.

Equity markets embarked on a divergent journey at the week's onset, with European equities witnessing a downturn juxtaposed against a modest 0.50% uptick in US equities. The German DAX's attainment of a historic high on Friday underscored the intricate interplay between global economic forces and market sentiments.

Interest rate futures paint a vivid picture of market expectations, with a 96.5% probability of June witnessing no alteration to the Federal Reserve's fed fund rate. Speculations regarding rate adjustments in July remain subdued, while September bears a tentative 48.6% likelihood of a 25 basis point reduction from prevailing levels.

The Pound Sterling maintains a steadfast stance above the psychological support level of 1.2500 against the USD, bolstered by concerns over the health of the US labor market in light of higher-than-expected Initial Jobless Claims. The GBP/USD pair retains its resilience as the USD grapples with recovery amidst mixed signals from the US macroeconomic front.