US Dollar recovers modestly from daily lows, remains in the red for the week

• Consumer confidence weakens in early November in the US. 
• Differences between Senate and House tax plan proposals underpin the demand for the buck.
• Inflation data from the U.S. will be the primary catalyst next week.

After plummeting to a fresh weekly low at 94.16, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, retraced a small part of its daily losses and was last seen at 94.30, where it was still down 0.15% on the day.

Disappointing consumer sentiment data weighs on the USD

Following Thursday's sharp retreat, the DXY fluctuated in a tight consolidation channel during the first half of the day on Friday before losing its traction in the NA session. According to the data released by the University of Michigan, the Consumer Confidence Index eased to 97.8 from 100.7 and missed the market expectation of 100.7. 

In the meantime, concerns over the corporate tax cut being delayed until 2019, which have been the main reason why the greenback suffered heavy losses yesterday, eased a little after the US Treasury Secretary Steven Mnuchin's comments, allowing the USD to erase some of its daily losses. Mnuchin said there were minor differences between House and Senate tax bills and they were looking for ways to reconcile them.

• US Tsy Sec. Mnuchin: Looking forward to getting tax bill to President in December

Next week, the CPI data on Wednesday will be the main driver for the greenback's price action. "US headline inflation may dip back following a fall in gasoline prices. But pipeline pressures are continuing to build and we are optimistic for the outlook for core inflation, which has been surprisingly weak of late. That’s one factor behind our call for a December Fed hike and two further increases next year," ING analysts noted in a recent report.

• US key reports for next week: inflation and retail sales - Danske Bank

Technical levels to consider

The first technical support for the index could be seen at 93.95/94 (50-DMA/psychological level) followed by 93.10 (20-DMA) and 92.60 (Oct. 13 low). On the upside, resistances align at 95 (psychological level), 95.60 (Jul. 14 high) and 96.25 (Jul. 5 high).