FX.co ★ US Dollar Rebounds

The US dollar index experienced an initial decline but subsequently recovered, trading above 98.4 on Tuesday. This fluctuation occurred as the Consumer Price Index (CPI) report had minimal impact on altering market expectations concerning the Federal Reserve's upcoming policy decisions. Both annual and monthly headline inflation figures rose in accordance with predictions, while core inflation was softer than anticipated, indicating that current price pressures, notably those resulting from recently enacted tariffs, are presently limited. In response to the data, traders slightly raised their expectations for interest rate cuts. Nonetheless, the market continues to anticipate two reductions in the federal funds rate by the end of the year, with the preliminary rate cut likely occurring in September. Federal Reserve Chair Jerome Powell warned that inflation could escalate this summer due to tariff impacts, suggesting potential delays in implementing rate cuts. Anticipation is building for upcoming Producer Price Index (PPI) and retail sales data, scheduled for release later this week, which will provide further insight into the US economy's health. The dollar generally strengthened against the yen and the euro.