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Dollar holds steady as markets wait for CPI and Warsh testimony

Brent rose above $79 but has not decisively cleared $80, leaving traders reluctant to reprice inflation expectations and Fed policy ahead of Tuesday’s June CPI and Kevin Warsh’s first congressional appearance.

Reported · Written up by our desk · Major Pairs

Escalating conflict in the Middle East would typically lift the US dollar, but markets have largely hesitated, according to Action Forex. Brent crude moved above $79 after the US-Iran conflict expanded over the weekend, yet it has not broken decisively above $80, a level that could prompt a wider inflation readjustment.

Traders also appear to be waiting for key US catalysts that may matter more for policy expectations than the latest geopolitical headlines. Attention is focused on Tuesday’s US June CPI release at 12:30 GMT, followed about 90 minutes later by Kevin Warsh’s first congressional testimony as Federal Reserve chair before the House Financial Services Committee, with the Senate Banking Committee hearing on Wednesday.

The muted reaction suggests investors are not yet convinced the escalation will produce a sustained energy-driven inflation shock. With crude failing to establish a clear break higher, markets have limited incentive to materially revise inflation expectations or the pricing of Fed policy, Action Forex added.

For context on Warsh’s likely framework, Action Forex pointed to Friday’s Monetary Policy Report, described as the blueprint for his prepared remarks. The report characterized the US economy as expanding at a solid pace, citing Q1 GDP growth of 2.1% annualized, unemployment at 4.2%, and labor conditions described as broadly stable.

Latest closeWTI crude $71.51 ▼0.8%|Brent $76.00 ▼0.4%

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