|

US Dollar Index: DXY seen returning to 96.00–100.00 range – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes that the Dollar stabilized after a sharp sell-off linked to suspected USD/JPY intervention, but argues the broader USD rally since May has likely ended, with US Dollar Index (DXY) expected to move back into a 96.00–100.00 range. Haddad highlights softer US inflation data, solid domestic demand, and concerns that Fed Chair Kevin Warsh may fall behind the curve.

DXY expected to retreat from highs

"We believe the USD rally from May has run its course, with DXY poised to retreat back into a 96.00-100.00 range. The tailwind to USD from resilient US economic activity is outweighed by Fed Chair Kevin Warsh failure to turn tough inflation rhetoric into a credible policy, increasing the risk the Fed falls behind the curve in containing inflation."

"The June US PCE data was reassuring. However, Warsh risks a credibility gap by relying on markets to do the Fed’s tightening instead of acting itself."

"US June PCE largely matched consensus, confirming the slowdown in inflation already signaled by the June CPI and PPI data two weeks ago. Headline PCE fell -0.1% m/m vs. +0.4% in May due to lower gasoline price, while the annual rate eased to 3.7% vs. 4.1% in May (FOMC 2026 projection: 3.6%)."

"US Q2 real GDP growth underwhelmed but details show domestic demand activity is rock solid. Real GDP rose 1.5% SAAR (consensus: +2.0%) vs. 2.1% in Q1."

"The US Q2 Employment Cost Index (ECI) is today’s data highlight (1:30pm London, 8:30am New York). ECI wages & salaries - the Fed’s favorite wage data – was 3.4% y/y in Q1 consistent with the Fed’s 2% target given average annual labor productivity growth of 2.1%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

GBP/USD drops below 1.3450 on USD rebound

GBP/USD trades in negative territory below 1.3450 in the European trading hours on Friday. Heightened Middle East tensions and rising global oil prices provide some support for the safe-haven US Dollar (USD), weighing on the pair. The US Michigan Consumer Sentiment Index will be published later on Friday. 

EUR/USD retreats to 1.1500 after EU inflation data

EUR/USD corrects lower on Friday and trades near 1.1500 following a two-day rally that saw the pair gain more than 1%. While the risk-averse market atmosphere supports the US Dollar and weighs on the pair, the stronger-than-expected core HICP inflation reading from the Eurozone helps the Euro limit its losses.

Gold declines but stays above $4,000 as Iran risks revive USD demand

Gold comes under renewed bearish pressure following a two-day recovery and trades deep in the red below $4,100, as the US Dollar regains its traction. Escalating US-Iran tensions keep inflation risks and Fed rate hike bets in play, supporting the USD, while the technical setup seems tilted in favor of bearish traders and backs the case for further losses.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Indian Rupee hits fresh two-week high against US Dollar

The Indian Rupee extends the week-long rally against the US Dollar on Friday. The USD/INR pair slides to a fresh over two-week low near 95.30 due to the overnight slump in the US Dollar amid growing doubts regarding whether the Federal Reserve is seriously committed to bringing the United States inflation down.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?
The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.