- DXY hits 3-day highs near 92.70 following US data.
- US 10-year yields are approaching 1.40% after CPI.
- US Headline CPI, Core CPI surprised to the upside in June.
The dollar gains additional traction to the upside and reaches new multi-day highs near 92.70 when measured by the US dollar index (DXY).
US Dollar Index Strengthens on Strong CPI
The index exacerbated the rise to new 3-day highs in the 92.70 / 75 zone after US inflation figures measured by the CPI came in well above projections for June.
In fact, consumer prices rose 5.4% and 4.5% annualized when it comes to prices excluding food and energy costs. Other calendar data noted that the NFIB index improved to 102.5 for the month of June (from 99.6).
Following the release of inflation data, US 10-year yields briefly tested close to 1.40%, while federal funds futures are now priced at a 90% probability of a rate hike for the purposes of reporting. 2022 and 100% in January 2023.
What to look for around USD
The DXY rally secured new highs near 92.90 before dropping to the 92.00 zone late last week. The latest FOMC Minutes showed early discussions of the downsizing, a positive assessment of the pace of the US recovery, and hinted that high inflation could last longer than initially estimated, all supporting improved sentiment around the dollar. . However, the latest payroll results supported the Federal Reserve’s patient stance and have the potential to moderate a stronger rise in the dollar.
Technical levels
Now the index is gaining 0.41% to 92.60, a breakout of 92.84 (monthly high of July 7) would open the door to 93.00 (round level) and finally to 93.43 (high of March 21, 2021) . On the other hand, the next support emerges at 91.51 (weekly low on June 23) followed by 91.38 (200-day SMA) and finally 89.53 (monthly low on May 25).
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