Home›Forex›Major Pairs›Dollar Index extends recovery as oil lifts inflation e…

Dollar Index extends recovery as oil lifts inflation expectations

CME FedWatch shows odds of the Fed holding rates in September at 48.3%, up from 30.4% a month earlier, after July nonfarm payrolls eased rate-hike expectations.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the greenback versus six major currencies, extended its Monday recovery move on Tuesday and traded slightly higher near 99.90, supported by rising oil prices tied to concerns about energy supply disruptions, FXStreet reported.

FXStreet said the same oil-driven inflation outlook has kept global inflation expectations less anchored. At the same time, strategists pointed to July nonfarm payrolls that signaled a more dovish tone for the Federal Reserve, including a reduction in the overall labor force and downward revisions to prior labor additions.

ING strategists described the data as clearly dovish and dollar-negative, arguing it reinforced the view that the Fed is done hiking. CME FedWatch indicated the odds of rates staying unchanged at the September meeting rose to 48.3% from 30.4% a month earlier.

Looking ahead, investors are set to focus on July CPI data, due Wednesday, while technical levels in the Daily chart highlighted near-term pressure as the DXY holds below the 20-day EMA near 100.3. FXStreet noted the index could test 99.00 and the May 29 low at 98.75 if Friday's low at 99.40 is not sustained.

Latest closeDollar index 99.81 ▲0.2%

More like this

Sources