US Dollar Forecast: Sinking Despite Rising Inflation - Levels for DXY Index, USD/JPY
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US Dollar Outlook:
The US Dollar (via the DXY Index) continues to trade lower after losing the uptrend from the February and March swing lows.
Higher inflation typically feeds into higher interest rates amid the expectation for central bank tightening. But amid an otherwise resolute Federal Reserve intent on keeping rates low through the end of the pandemic, the US Treasury yield curve has remained stable in the wake of the March US inflation report.
US Dollar Continues to Slide
A banner US inflation report was perhaps the best opportunity the US Dollar had this week for a significant catalyst, but the market has walked away from the March data, well, unimpressed. Even as the pandemic-induced base effect makes it way through the data now and for the next few months, Fed Chair Jerome Powell has been clear in his and the FOMC’s intent to keep providing extraordinary support to markets until the crisis in well behind the US economy.