US CPI Due
The US Dollar is on watch today as traders brace for the latest US inflation data this afternoon. Annualised headline CPI is expected to rise to 2.6% from 2.4% prior. If seen, the data could cause some pushback against near-term Fed easing expectations, particularly given the risks ahead with US tariffs set to rise again on August 1st.
Bullish USD Scenario
The lack of upside inflationary pressure in recent months has confounded many players given the broad expectation that tariffs would feed into higher inflation. However, some argued that it was simply taking longer for those effects to show. If that expected inflationary pressure now starts to materialise, this could have severe repercussions for the Fed’s outlook, leading to a sharply higher US Dollar in response.
Bearish USD Scenario
On the other hand, if inflation fails to jump as expected today, this could be seen as cementing expectations for a September Fed rate cut, putting fresh pressure on USD. A downside surprise today should alleviate some concern ahead of a potential uptick in tariffs next month, again downplaying the view that tariffs will necessarily lead to higher inflation. In this scenario, USD could move firmly lower as risk assets increase amidst stronger Fed easing forecasts for Q3.
Technical Views
DXY
The sell off in DXY has stalled for now into the 96.89 level with price reversing back above the bear channel highs in line with rising momentum studies readings. Price is now testing the 98.03 level with 99.15 the next level above if we break higher here.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.