The US dollar index, which measures the strength of the greenback against a basket of major currencies, edged lower but remained close to the more-than-one-year high touched in the previous session, as traders awaited the release of PCE inflation data. PCE is the Fed’s preferred inflation gauge, and analysts expect a slight uptick in the May reading compared with the previous month. Since mid-June, the dollar index has risen by more than 2%, a move triggered by the latest Federal Reserve meeting. Although the central bank kept rates on hold, its stance turned more hawkish, with Chairman Kevin Warsh delivering a message focused on containing inflation. This led to an increase in expectations of further rate hikes, potentially as early as the end of the summer. Against this backdrop, traders will remain focused on incoming US economic data and developments in the US-Iran peace talks. Any flare-up in the conflict could trigger fresh spikes in oil prices, fuelling inflation concerns and creating room for further gains in the dollar.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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