The dollar recorded some volatility yesterday but could remain within its downtrend overall while traders expect the start of interest rate cuts in March despite several Fed members attempting to temper market optimism. The dollar could follow treasury yields in their decline. Traders could remain cautious however ahead of the release of GDP and PCE data in the next two days.

The British Pound declined yesterday following an unexpected drop in inflation levels. The data fueled speculations that the Bank of England could start cutting rates earlier than previously expected. The change in expectations could weigh on the currency and could weigh on its rebound.

The Japanese yen could continue to see some downside risks after the Bank of Japan maintained its rates unchanged. Expectations of a more restrictive monetary policy remained unanswered and could leave the currency with less support after accumulating gains against the dollar for the last couple of weeks.