The U.S. dollar index (DXY) tumbled 1.16% to an intraday low of 94.07 on Thursday after the leaders of Russia, Ukraine, France and Germany reached a ceasefire deal for the year-long Ukrainian conflict. The Obama administration is now taking a wait-and-see approach and expressed skepticism that Moscow will live up to the terms of the agreement. 

Separately, the Bureau of Economic Analysis (BEA), the U.S. Commerce Department, said on Thursday that core retail sales excluding automobiles, gasoline, building materials and food services rose 0.1% in January. Economists had expected an increase of 0.4%. 

Economists seem to have no clear explanations to why discretionary spending is still on the decline despite a pick-up in the U.S. job market, upbeat consumer confidence, and cheaper gas prices. According to Reuters, Barclays is trimming its first-quarter U.S. GDP growth estimate from 2.5% to 2.2% while J.P. Morgan cut its estimate from 3% to 2.5%.

Sluggish retail sales data came on the heels of the BEA’s report last week showing the headline personal consumption expenditures (PCE) index rate for December was up 0.7% year-on-year, down from 1.2% the previous month. The core PCE index printed at 1.3%, also down from the previous month's 1.4%. 

One should be aware that the Federal Reserve is no longer using the consumer price index (CPI) as its official 2.0% inflation target and instead, has adopted the personal consumption expenditures (PCE) index, as it is more real-time economic data and covers a wide range of household spending. 

It seems that it might take a while until the Fed’s inflation target of 2.0% can be reached. Hence, some of the Fed members were already considering whether to amend its 2.0% target inflation rate, according to minutes from the October Federal Open Market Committee meeting.

The euro-dollar exchange rate surged 0.77% intraday to 1.1423 dollars per euro on Thursday and pulled back to close at 1.1403 dollars per euro. The major technical head resistance for the euro-dollar exchange rate is 1.15 dollars per euro, where the forex traders are expected to step in and short the euro-dollar.

The Japanese yen also fared well today as the dollar-yen exchange rate fell 1.62%, from 120.41 to 118.51 yen per dollar. The next dollar-yen supports are about 116.36 yen per dollar and 115.07 yen per dollar, or the 100-day SMA.

The U.S. Dollar index (DXY), which is a weighted geometric index of the value of the U.S. dollar relative to a basket of six major currencies including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss france, dropped over 1% today and closed at 94.22 but still within the 93.75 to 95.40 range. If the U.S. dollar continues to fall for whatever reasons, there are several technical supports between the 93 and 90 levels. 

The near-term technical resistances are around 95 and 96.27, or 50% Fibonacci retracement. The odds that both resistances will be broken are high as Greece’s left-wing government could be running out of money as early as next month if no agreement between Greece and the ECB can be reached.

ECB President Mario Draghi’s quantitative easing (QE), set to begin next month, is still facing some legal and political hurdles, largely from Germany. In theory, it is still possible that the German Federal Constitutional Court in Karlruhe could instruct the German Bundesbank not to cooperate with the ECB bond-purchasing program. 

A German lawyer is already preparing a legal complaint against the ECB bond-purchasing program. Other legal cases could mount, similar to that of the middle of the European debt crisis in 2012. 

QE may help boost the Eurozone’s economy in the short term. Nonetheless, the long-term effectiveness of such a program remains to be seen at this point. Hence, some hedge funds are anticipating the euro to be in parity with the U.S. dollar by the end of this year, or in early 2016.