The US Dollar is experiencing downward pressure following a lower-than-expected inflation reading of 2.3% in April, the lowest since February 2021. This easing of inflation may prompt the Federal Reserve to adopt a more dovish policy stance. Additionally, uncertainties surrounding the impact of US-China tariffs and upcoming economic data, particularly retail sales and producer prices, could further influence the dollar's outlook. Recent stabilization in longer-term yields, alongside reduced hawkish expectations for the Fed, adds complexity to market sentiment regarding the currency's future.
The recent inflation report, showing a decline to 2.3%, may shift the Federal Reserve towards a more dovish policy stance, impacting the US Dollar.
With the US-China tariff rollback agreement assessed by investors, lingering uncertainties could cloud the outlook for the dollar.
Longer-term US yields stabilized below 4.47%, indicating reduced expectations of a hawkish Federal Reserve.
Upcoming retail sales and producer price data are pivotal, as weaker figures may lead to dollar pressure while stronger findings could bolster it.
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