US Dollar Weekly Forecast: Eking out gains as market focuses on April inflation data

  • The USD Index (DXY) reversed two consecutive weeks of losses.
  • Markets continue to see the Fed reducing rates in September.
  • Fed speakers kept a prudent stance regarding rate cuts.
  • The next salient event will be US inflation figures tracked by the CPI.

A tepid recovery during the week led to a bounce of the US Dollar (USD) to the area beyond the 105.00 barrier when gauged by the USD Index (DXY), reversing two consecutive weeks of negative price action.

Once again, the weekly performance of the Greenback primarily reflected investors' reactions to changing sentiments regarding the potential timing of the Federal Reserve’s (Fed) easing programme. The possibility of a rate adjustment at the September 18 meeting seems to have gained traction and is currently perceived as the most probable option among market participants.

On the latter, CME Group’s FedWatch Tool sees the probability of lower rates at the September 18 gathering as around 70%.

Supporting the above emerged further cooling of the US labour market, as demonstrated by higher-than-expected weekly Initial Jobless Claims, while a cautious message from many of the Fed's policymakers added to this view.

That said, Minneapolis Federal Reserve President Neel Kashkari suggested that the robust housing market and a potential slowdown in inflation progress might imply that monetary policy is not as restrictive as Fed officials perceive it to be. On Wednesday, Federal Reserve Bank of Boston President Susan Collins emphasized the necessity for the US economy to cool down as a means to bring inflation back in line with the central bank’s 2% target, while San Francisco Federal Reserve President Mary Daly remarked on Thursday that there is "considerable" uncertainty regarding the trajectory of US inflation in the upcoming months, while expressing confidence that price pressures are still gradually easing.

Back to the US money markets, the recent performance of the US Dollar corresponded with a consolidative mood in US yields at the lower end of the monthly range across various maturity periods. This occurred against an unchanged macroeconomic backdrop, suggesting the potential for only one or perhaps no rate cuts at all for the remainder of the year.

Regarding interest rate trajectories among G10 central banks and inflation dynamics, it is anticipated that the European Central Bank (ECB) may reduce interest rates during the summer, possibly followed by the Bank of England (BoE). However, both the Federal Reserve and the Reserve Bank of Australia (RBA) are expected to commence easing later this year, potentially in the fourth quarter. 

In the week ahead, the salient event will be US inflation figures for April tracked by the Consumer Price Index (CPI). Other important data to be released are the Producer Price Index (PPI) or Retail Sales. Fed's policymakers will continue to take the stage to signal their outlook on interest rates. 

Technical Analysis of USD Index (DXY)

In the event of intensified downward pressure, the USD Index (DXY) is projected to find temporary support at the 55-day Simple Moving Average (SMA) at 104.61, followed by the May bottom of 104.52 (May 3) and the more relevant 200-day SMA of 104.28. A deeper decline exposes the April 9 low at 103.88 ahead of the provisional 100-day SMA at 103.96 and the March low at 102.35 (March 8). Further decline could lead to a test of the December low at 100.61 (December 28), ahead of the psychological barrier of 100.00, and the 2023 bottom at 99.57 (July 14).

On the contrary, bullish momentum could prompt a retest of the 2024 peak at 106.51 (April 16). Surpassing this level might encourage market participants to consider revisiting the November high at 107.11 (November 1), just before the 2023 top at 107.34 (October 3).

From a broader perspective, the prevailing bullish bias is anticipated to persist as long as DXY remains above the 200-day SMA.

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

USD   0.05% 0.10% -0.11% 0.30% -0.02% -0.05% -0.03%
EUR -0.05%   0.05% -0.18% 0.23% -0.06% -0.12% -0.07%
GBP -0.10% -0.05%   -0.21% 0.18% -0.10% -0.14% -0.12%
JPY 0.11% 0.18% 0.21%   0.31% 0.05% 0.04% 0.07%
CAD -0.30% -0.23% -0.18% -0.31%   -0.30% -0.33% -0.30%
AUD 0.02% 0.06% 0.10% -0.05% 0.30%   -0.03% -0.03%
NZD 0.05% 0.12% 0.14% -0.04% 0.33% 0.03%   0.02%
CHF 0.03% 0.07% 0.12% -0.07% 0.30% 0.03% -0.02%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD retreats toward 1.0850 on modest USD recovery

EUR/USD retreats toward 1.0850 on modest USD recovery

EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.


GBP/USD holds above 1.2650 following earlier decline

GBP/USD holds above 1.2650 following earlier decline

GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.


Gold climbs to multi-week highs above $2,400

Gold climbs to multi-week highs above $2,400

Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.

Gold News

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday. 

Read more

Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates

Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates

After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.

Read more