Dollar index suffers a three-day losing streak ahead of Fed minutes

• The dollar index dropped for three-straight sessions, hit a two-week low.
• Focus on US inflation report and Fed minutes.

The dollar index (DXY), which tracks the value of the greenback against majors, fell for the third straight session on Tuesday and hit a two-week low of 89.55 in Asia.

The pullback from 90.60 has neutralized the immediate outlook and a drop below 89.40 (March 7 low) will likely put the USD bears back into the driver's seat.

Eyes US inflation report

The consumer price index (CPI), due at 12:30 GMT, is expected to show the cost of living stalled in March. Meanwhile, the core CPI, which excludes the volatile food and energy component, is seen rising 2.1 percent year-on-year vs. 1.8 percent rise seen in February. An uptick in the core CPI could boost the treasury yields and the demand for the US dollar.

Fed minutes to offer clues on how fast the policymakers intend to bump up rates

Minutes of the Fed's March, due at 18:00 GMT, will likely more clues on how close the central bank is to raise rates four times this year. Also, Fed's view on the yield curve, rising Libor could influence the FX markets.

Dollar Index Technical Levels

The immediate resistance at 89.82 (April 2 low), if bettered, could yield a rally to 90.45 (March 20 high) and 90.60 (April 5 high). On the downside, breach of support at 89.40 (March 7 low) would allow a drop to 89.00 (psychological support) and 88.94 (March 27 low).