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Dollar Index dips after softer US CPI cools Fed hike odds

DXY traded near 100.92, after June headline CPI fell 0.4% month over month and annual inflation slowed to 3.5%, while CME FedWatch lowered the probability of a July hike to 12% from 40%.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the greenback versus a basket of six major currencies, fell on Tuesday as softer US inflation data reduced expectations for an imminent Federal Reserve rate hike, FXStreet said.

At the time of writing, the DXY traded around 100.92, down nearly 0.38% on the day, after an intraday low of 100.60. June headline CPI fell 0.4% month over month after rising 0.5% in May, and annual inflation eased to 3.5% from 4.2%.

Core CPI was flat month over month, while annual core inflation slowed to 2.6% from 2.9%, both cited as below forecasts. Following the release, the chance of a July Fed hike fell to 12% from 40%, and the odds of a September increase dropped to 59% from 74%, according to the CME FedWatch Tool.

Despite the cooling inflation prints, FXStreet noted that upside risks remain as tensions in the Middle East lift oil prices, keeping the case for Fed tightening later in the year alive and limiting the dollar’s downside. Attention is now turning to US Producer Price Index data due on Wednesday for further guidance on the inflation outlook.

Latest closeDollar index 101.28 ▲0.3%

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