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Banks see the US dollar range-bound ahead of core CPI
OCBC said only a core CPI print of 0.4% month over month or higher would change its range-bound USD base case.
Three banks, OCBC, Commerzbank, and ING, said the US dollar is on solid footing for now, but they do not expect a decisive breakout or a sharp reversal soon, according to an FXStreet write-up.
The outlet said the banks attribute current USD support to higher oil prices, firm US yields, and still sticky expectations for Federal Reserve tightening, while warning the recent rally looks stretched and that any next major move will require a clear trigger.
FXStreet reported that the most immediate test is upcoming US core consumer price index data, with OCBC stating that only a core CPI print of 0.4% month over month or higher would change its view of a well-supported but range-bound dollar.
According to FXStreet, Commerzbank pointed to the Fed’s credibility after last month’s rate hike as an anchor for the dollar, while ING said the greenback is overvalued versus many G10 currencies and positioning is extended but saw no catalyst for a reversal.