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US CPI and Warsh testimony set to test the dollar’s recovery

The dollar index, near 101.0, is expected to react sharply to Tuesday’s CPI, with forecasts calling for headline inflation to fall 0.1% month over month in June and core CPI to rise 0.3%.

Reported · Written up by our desk · Major Pairs

FXStreet says the coming week is shaping up as a key test for the US dollar, with traders focused on Tuesday’s US Consumer Price Index release and Federal Reserve Chair Kevin Warsh’s congressional testimony on Tuesday and Wednesday.

According to the outlook, the US Dollar Index (DXY) is trading near 101.00 and has been recovering from a one week low hit earlier on Friday. The market backdrop includes a mix of softer labor-market data, renewed geopolitical uncertainty, and ongoing inflation concerns.

FXStreet outlines CPI expectations that would drive the dollar, forecasting headline CPI to decline 0.1% month over month in June after a 0.5% increase in May, with the annual rate previously at 4.2%. Core CPI is expected to rise 0.3% month over month, up from 0.2%, while the annual core rate is expected to stay at 2.9%.

The same preview notes the euro and pound could remain sensitive to their own calendars alongside the US event risk, citing EUR/USD around 1.1420 and a weekly loss of about 0.19%, while GBP/USD is near 1.3400 after a roughly 0.34% weekly gain and faces UK GDP, industrial production, and manufacturing output due Thursday.

Latest closeEUR/USD 1.142 ▼0.0%|GBP/USD 1.340 ▲0.0%|Dollar index 100.97 ▲0.0%

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