WSJ reports ''Fed debates whether wages or low unemployment will drive inflation''

The Wall Street Journal has written in the weekend press that ''stubbornly high inflation is finally easing as supply chain disruptions fade and interest rates at 15-year highs put the brakes on demand. Now, Federal Reserve officials have voiced unease that prices could reaccelerate because labour markets are so tight.''

''At issue is what’s the right way to forecast inflation: a bottoms-up analysis of recent readings on prices and wages that puts more weight on pandemic-driven idiosyncrasies — or a traditional top-down analysis of how far the economy is operating above or below its normal capacity,'' Nick Timiraos wrote, adding, ''Some inside the Fed, including its influential staff, put more weight on the latter, which would argue for tighter policy for longer. Others prefer the former, which could argue for a milder approach.''

US Dollar update, daily chart

The US Dollar edged up from eight-month lows on Friday despite slowing inflation data ahead of the Federal Reserve this week whereby investors are hoping that the central bank can engineer an economic soft landing and reduce its pace of aggressive monetary tightening.

DXY is trapped between support and resistance in the front side of the daily bearish trend. However, should the Fed's communication still emphasize that it is not done yet in terms of tightening its policy stance, signalling that more rate hikes are still in the pipeline, US Dollar volatility could be extreme this week.