US Dollar Fundamental Forecast: DXY Primed Ahead of CPI Data

The consumer price index (CPI) will be the key driver of the DXY’s direction on Friday. The core CPI, which strips out volatile food and energy prices, is expected to cross the wires at 4.9% y/y, up from 4.6% in October. If the CPI print is better than expectations, the US Dollar should move higher. However, a lower reading will put pressure on the DXY.

The US Dollar DXY index reflects the strength of the US dollar against a basket of currencies. The US dollar is 57.6% stronger versus the Euro than it is against the British Pound. The euro has been losing ground against the British Pound recently, but it has rebounded against the Australian dollar and New Zealand dollar. Despite the recent drop in EUR/USD, bulls are now looking at other currency pairs for support.

The Euro is a major component of the DXY. Recent Eurozone inflation data has weakened the Pound, but this may be a good thing for the US Dollar. The European Central Bank president, Christine Lagarde, will be speaking at 1630 GMT+8, and it may be a bit volatile after that. Retail sales in the eurozone will likely fill a gap after the speech, so EUR/USD could be manipulated on Thursday.

U.S. consumer price data could also provide guidance for when the Federal Reserve raises interest rates. The safe haven currency traded near a one-month low against the yen on Wednesday. The year-over-year core measure is expected to rise 0.4% from September’s 0.2%. The rate is still well above the Fed’s 2% average annual inflation target.

DXY’s strength is closely linked to the Euro. The euro has recently shown some safety-haven appeal. It has gained against the British Pound, Australian dollar, and New Zealand dollar last week. Moreover, the euro’s weakening has weakened the US Dollar compared to its other counterparts. This is the main reason why DXY’s fundamental index is the key indicator for the US economy.

Inflation data released in the United States will provide a key guide for the timing of the next increase in interest rates by the Federal Reserve. The safe haven currency will likely trade near a one-month low against the Japanese yen on Wednesday. Further, the closely watched year-over-year core measure will rise 0.3 percentage points to 4.3%. Inflation data will also be a key factor in determining the US Dollar’s trend and performance in global markets.

On the Eurozone’s currency market, EUR/USD is the largest component of DXY. Its weaker counterpart, the Euro, has shown its safe-haven appeal recently. Its gains against the British pound and the Australian dollar last week suggest that the Euro is easing its haven appeal versus the US dollar. Its weakness also means that the European currency may be a risky asset for investors.

The DXY is primed to move higher for a sixth week. While there are many reasons for the DXY’s strength, the eurozone’s unemployment rate will likely push the US Dollar upward. This will also cause the Euro’s currency to fall. But the data will also be positive for the USD, as a result of the Euro’s fall.

The US Dollar’s DXY index is a measure of its strength against a basket of currencies. Its DXY index, or “strength gauge,” is composed of five major currencies: the Euro, the Japanese Yen, the Canadian dollar, and the Canadian dollar. The British pound’s recent weakness, in turn, pushed down the US Dollar.

A high-frequency trading strategy is a key strategy when US Dollar strength is limited by news releases. The data from this report is often delayed. It is important to monitor the US Dollar’s trend, as it is a key signal for the US currency. As long as the U.S. government is confident about the economy, the US Dollar can continue to move higher.