The US Dollar Index is experiencing downward pressure, hovering around 99. Investors anticipate potential Federal Reserve interest rate cuts following encouraging inflation data. Core consumer prices rose less than expected, reinforcing the view that inflation is cooling. Traders are closely monitoring Consumer Price Index (CPI) data for further clues about the Fed’s future policy decisions.
- The US Dollar Index slipped below 99 on Tuesday.
- Investors are increasing bets that the Federal Reserve will cut interest rates further.
- Underlying price pressures appear to be easing.
- Core consumer prices rose 0.2% in December, less than market expectations.
- The annual core inflation rate held at 2.6%, matching a four-year low.
- The US Dollar Index is holding gains near 99.00 during the early hours on Tuesday.
- Traders await the Consumer Price Index data for December.
The dollar faces headwinds as inflation data suggests a potential shift in monetary policy. Slower inflation could prompt the Federal Reserve to lower interest rates, diminishing the dollar’s appeal to investors seeking higher yields. Future CPI data will be crucial in shaping the dollar’s trajectory.