On Monday, June 16th, during the Asian trading session, the US Dollar Index was quoted at 98.31, opening at 98.2. On Friday, the University of Michigan released its preliminary consumer confidence survey, which showed a significant increase in US household confidence. However, both one-year and five-year consumer inflation expectations declined slightly, aligning with the lower-than-expected CPI and PPI data earlier in the week. The slowdown in inflation has increased the likelihood of the Federal Reserve cutting interest rates, which could lower US yields and weigh on the dollar.
The market widely expects that President Trump’s tariff policy could push up prices and curb economic growth. This potential risk was highlighted in the Federal Reserve’s statement following its last interest rate meeting. However, the current economic trend is not aligning with these expectations, which could put the Federal Reserve in a difficult position when it comes to policy decisions.
From a pricing perspective, there are no alarming signs. The core inflation rate in May was lower than market expectations for the fourth consecutive month. Influenced by expectations of multiple rate cuts this year, US Treasury bond prices rose last week. The yield on the two-year US Treasury note, which is highly sensitive to changes in Federal Reserve policy, dropped by more than seven basis points to 3.96%.
However, Federal Reserve officials may still need several months of data to accurately assess how much of the tariff costs are being passed on to consumers.Meanwhile, Israel’s air strikes on Iran could introduce additional complexities. In the past, Fed officials have largely based their judgments on energy price trends, but this time, fluctuations in oil prices could interfere with inflation expectations, further increasing the difficulty and uncertainty of policy-making.
Technically, the US Dollar Index (USD) showed a range-bound fluctuation pattern last Friday. It encountered clear resistance when moving upward to around 98.60, then retreated and found effective support above 97.60. This suggests that the US dollar may face downward pressure after a short-term surge.
For today’s market situation, if the US dollar encounters resistance below 98.65 when it rises, technical analysis suggests that its subsequent decline could target the range of 97.65 to 97.15. Specifically, the short-term resistance levels for the US dollar index today are concentrated in the range of 98.60 to 98.65, while the important short-term resistance levels are located in the range of 99.05 to 99.10. In terms of support, the short-term support level for the US dollar index today is between 97.65 and 97.70, and the important short-term support level is between 97.15 and 97.20.
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