The US Dollar (USD) is posting minor gains against most peers on Tuesday, fuelled by hawkish comments by Federal Reserve (Fed) Governor Christopher Waller, with investors focusing on October’s Consumer Price Index (CPI) release. The USD Index (DXY), which measures the value of the US Dollar against a basket of six majors, has turned positive in the daily chart, after hitting session highs at 101.77, but it remains on the defensive following a 0.6% reversal on Monday.
Fed’s Waller provided a fresh boost to the US Dollar in an otherwise calm market on Tuesday, flagging the possibility of a 50 basis-point rate hike in December if consumer inflation remains at high levels.
The US consumer inflation report for October is due in about an hour, but it will lack the key year-on-year reading, which might mute its impact. Last year’s government shutdown discontinued data collection activity in that period, and there is no October 2025 reading to be compared with this year’s inflation.
Monthly inflation, on the other hand, is seen moderating in October. Danske Bank’s US economists “expect inflation to have come down from its September pace, with both headline and core at +0.20% on the month,” following the fastest monthly headline CPI in six months, at +0.65%,” says the bank in a note.
Oil prices’ decline has boosted risk appetite, weighing on the US Dollar
Looking from a wider perspective, the US Dollar remains on its back foot, as the sharp decline in Oil prices has encouraged investors to bet on riskier-perceived currencies, namely the risk-sensitive NZD and AUD, but also the Euro and the British Pound.
Analysts at Brown Brothers Harriman observe that “risk appetite is recovering,” as Brent crude “slipped towards its 200-day moving average at $93.85 a barrel” after President Donald Trump “downplayed the likelihood of renewed military strikes on Iran.”
Equity markets have also recovered partially this week after the AI-driven sell-off witnessed lin the last one. This is contributing to improving investors’ appetite for risk, keeping the pressure on the USD.
Against this background, the DXY keeps trading in the lower range of the last four weeks’ trading band, with key support at the 101.00-101.20 level relatively close, while the 102.35-102.50 area that capped bulls in late October and early November seems out of reach at the moment.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
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Economic Indicator
Consumer Price Index ex Food & Energy (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM print compares the prices of goods in the reference month to the previous month.The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
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