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US dollar index gains as Waller hawkishly boosts July hike odds

The DXY trades near 101.25 after falling to 100.80 earlier, with CME FedWatch pricing a 41% July hike chance versus 25% a week ago.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the greenback against a basket of six major currencies, regained momentum on Monday after hawkish remarks from Federal Reserve Governor Christopher Waller increased expectations for an interest-rate hike as early as July, FXStreet said.

At the time of writing, the DXY was around 101.25 after an intraday low near 100.80. FXStreet cited Waller’s comments that there remains a credible path for inflation to return to the Fed’s 2% goal, but also raised the risk that incoming data could show inflation staying elevated or trending higher, which would require tighter policy.

CME FedWatch pricing shows markets have moved toward a July hike, with a 41% probability for the July meeting, up from 25% a week earlier, while the chance of a September hike rose to 75%. Traders are also turning to Tuesday’s US CPI report, where headline inflation is expected to ease 0.1% month over month in June after a 0.5% rise in May, and core CPI is projected to hold steady at 0.2%.

Geopolitical risk is also feeding into the outlook, with FXStreet noting renewed fighting in the Middle East that has revived supply disruption concerns tied to the Strait of Hormuz, which carries about 20% of global oil supplies. The article said West Texas Intermediate was around $77.72, up more than 8% on the day and at its highest level since June 22.

Latest closeDollar index 101.28 ▲0.3%

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