Dollar rebounds despite softer-than-expected US CPI – ING

Background of Dollar's Rebound

The US consumer price index (CPI) came in below expectations and significantly lower than our anticipated 0.4% month-on-month core reading. Yet, the dollar rebounded, indicating that the market is becoming more risk-seeking as expectations for the US central bank's interest rate policies shift due to easing inflationary pressures.

Market Reaction

The strengthening of the dollar suggests that investors are considering the possibility of a slowdown in the pace of rate hikes. Specifically, if upcoming economic indicators do not necessitate further rate increases, the US monetary policy is likely to remain stable. This scenario alleviates excessive selling pressure on the dollar.

Technical Analysis

In light of the dollar's rebound, it is anticipated that there will be a test of resistance levels in the future. However, as no clear price levels are stated, specific entry or stop-loss levels cannot be established. Keeping an eye on market direction and awaiting the next announcements may also be an option.