Dollar unloved ahead of key US inflation data; euro near eight-week high
Investing.com — The U.S. dollar slipped lower in early European trade Monday, trading near two-month lows ahead of the release of key U.S. inflation data for more clues over the timing of the start of the anticipated Federal Reserve rate-cutting cycle.
At 04:30 ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 102.287, after registering a hefty weekly loss of over 1% last, falling to levels last seen in mid January.
The dollar was hit hard last week after comments from Fed chief Jerome Powell, during his two-day testimony in front of Congress, were seen as dovish by the markets, suggesting the U.S. central bank was preparing to start cutting interest rates in the summer.
Mixed jobs data on Friday–with nonfarm payrolls increasing by 275,000 but the unemployment rate rising to 3.9% in February after holding at 3.7% for three straight months–kept an anticipated June interest rate cut from the Fed on the table.
And now traders will be looking to Tuesday's U.S. inflation data as they try to gauge how soon the Fed could start cutting interest rates.
Economists are expecting February's consumer price index to rise 0.4% after a faster than expected increase of 0.3% in January.
“We expect inflation figures to put a stop to the dollar decline this week,” said analysts at ING, in a note.
“The shifts in FX positioning last week no longer justify an exacerbation in USD downward pressure unless key data starts to turn in favour of Fed easing. There is a non-negligible risk that part of the USD losses driven by Powell’s testimony are unwound this week.”
In Europe, EUR/USD edged 0.1% higher to 1.0944, with the euro retaining strength after hitting an eight-week
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