During Tuesday's Asian trading session, the U.S. Dollar Index (DXY) continued to consolidate at lower levels, failing to stage a meaningful rebound for the third consecutive trading day, currently hovering around 96.80.

Overall market sentiment remained cautious, with investors awaiting key U.S. economic data while gradually reducing their short-term enthusiasm for dollar allocations. Recently, concerns that external capital's willingness to allocate to U.S. dollar assets might decline have become a significant factor weighing on the currency.

Market sources indicate that some Asian financial institutions are advising a reduction in the concentrated allocation to U.S. Treasuries to diversify risks and address uncertainties surrounding U.S. economic policy. This development has intensified market expectations that medium-to-long-term demand for the dollar could weaken, putting further pressure on the greenback.

Concurrently, global risk appetite has shown some improvement, leading to a temporary outflow of safe-haven funds from dollar assets ahead of a series of major U.S. data releases this week. The market widely expects the Federal Reserve to hold rates steady at its March meeting, but the policy focus for the year has clearly shifted towards an easing bias.

Current interest rate path projections suggest the first rate cut could occur in June, with the potential for another cut in September if the economy cools further. A decline in inflation expectations has reinforced this view.

The latest survey data shows the U.S. one-year inflation expectation has fallen to 3.1%, a six-month low, indicating inflationary pressures are easing gradually. Medium-to-long-term inflation expectations remain relatively stable, suggesting market fears of runaway inflation have notably subsided, which has somewhat eroded the dollar's interest rate support.

Regarding policy communication, Fed officials' remarks remain cautious. San Francisco Fed President Mary Daly noted that the U.S. labor market might maintain a state of low hiring and low layoffs but did not rule out the possibility of more pronounced cooling signs in the future.

Meanwhile, Fed Governor Michelle Bowman emphasized the importance of central bank independence, while also acknowledging the practical limitations of complete independence. These statements indicate the Fed maintains a flexible yet cautious stance regarding any policy shift.

The market's focus will now turn to the delayed January jobs report and the upcoming CPI data. These figures will be crucial for assessing whether the U.S. economy is continuing to cool and for gauging the Fed's potential rate-cut timeline, likely determining the dollar index's short-term direction. From a technical perspective, the dollar index remains within a weak consolidation range overall. Prices continue to trade below key medium-term moving averages, reflecting a lack of restored trend momentum. Repeated limitations on short-cycle rebounds indicate selling pressure persists above.

Regarding momentum indicators, oscillators are positioned in the mid-to-low range, not yet showing clear oversold signals, suggesting the dollar still has technical room to decline further. A break below the lower boundary of the current consolidation range could trigger a new wave of technical selling.

Conversely, any data-induced rebound is more likely to be viewed as a corrective move rather than a trend reversal. Overall, the technical setup still supports a weak-to-consolidation outlook, with the directional move highly dependent on the upcoming U.S. macroeconomic data releases.

The core pressure on the dollar index currently stems not from a single data point but from a confluence of multiple expectations. Concerns over foreign capital allocation are undermining the dollar's structural demand, while receding inflation and rate cut expectations are diminishing its interest rate advantage.

Ahead of key data releases, the dollar is more likely to maintain a defensive consolidation pattern. If employment and inflation data further confirm an economic cooling, the dollar faces medium-term downside risks. Conversely, if the data surprises to the upside, the dollar might only achieve a temporary reprieve.