Us Dollar On Strong Footing

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Us Dollar On Strong Footing

Us Dollar On Strong Footing Amid Sticky Inflation

The US dollar showed no signs of weakness during Monday's session. This is due to the inflation reading, which has poured cold water on the rate cut expectations.

Earlier, the market was hopeful that the Federal Reserve was only a few months away from starting its easing cycle. However, this may only materialize for a while as the CPI report has shown a resurgence of inflation.

For now, the Yen can be seen near the 150 handles against the USD, with a chance of more upside. Since the USD/JPY's ascend is a sign of USD strength, the most probable route for the USD/JPY is upward. Similar moves are seen in other USD pairs, as the strength of the greenback is broad-based.

Usd/Jpy Floats Near 150 On Intervention Fears

The only reason for the Yen to hold near the 150 handle is the fear that the Japanese authorities will intervene to keep the JPY supported.

That's why the JPY has already gained +0.2% during Monday's session and is trading near 149.94 (a few pips away from 150). Overall, the USD/JPY is up by 6%, which makes the daily decline of 0.2% almost negligible.

Just like that, the EUR/JPY pair is near 161.925, which is a 3-month low. This pair confirms that the USD/JPY short-term decline has more to do with the JPY than the USD weakness.

The trading volumes will remain thin for the rest of the day as the markets are closed due to the US holidays. That's why the DXY is near 104.14, with a change of -0.058% for the day. Overall, the DXY is up by 3% for 2024, which means the bullish trend is still intact.

For the year 2024, there are now forecasts that 100 bps rate cuts will materialize, while the earlier forecast was for 150 bps. However, much depends on the upcoming CPI, NFP, & other reports from the US economy.

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