US dollar update

US dollar summary

The US Bureau of Economic Analysis reported that US inflation, measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 2.5% year-on-year in February, aligning with market expectations and slightly surpassing January’s figure. Meanwhile, the core PCE Price Index, excluding volatile food and energy prices, matched analysts’ estimates by increasing 2.8% annually. The Easter Holiday curtailed the market’s response to US inflation data. However, the US Dollar experienced slight selling pressure following the announcement.

The US Dollar (USD) maintains by the end of this week its recent gains despite thin liquidity conditions on Good Friday. Fed Governor Christopher Waller indicated that the Federal Reserve may delay rate cuts amidst strong inflation data, contributing to market expectations of a reduced likelihood of a rate reduction in June. The EURUSD pair declined below 1.0800 on Thursday due to hawkish Fed comments, settling around 1.0780.

According to the CME FedWatch tool, the probability of a rate cut by the Fed in May is just 4%. For June the probability is more than 60% and this remains the prevailing scenario.

Upbeat US data, including an upward revision of Q4 GDP to 3.4% and better-than-expected Initial Jobless Claims and Consumer Sentiment Index, supported the USD.


Market Views & Opinions

ING in today’s article concludes the USD section:

“It is hard to speculate against the dollar in the G10 space, and barring any significant quarter-end rebalancing (look out for flows at 5:00 pm CET), it feels like the greater risks are DXY popping through 104.50 towards 105.00.”

Reuters in today’s article “Take five: A shiny new quarter” comments:

“The dawn of Q2 is different to the first quarter. In January, markets priced in almost six rate cuts from the Federal Reserve this year – a total of nearly 150 basis points. Now, just three are baked in.”


“The dollar, meanwhile, is riding high against almost every major currency, pushing central banks, including those of Japan, China and India, to intervene, or consider intervening, to bolster their currencies.”



The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.

a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.

Leave a comment