Cooling US inflation data trims September Fed rate hike odds to nearly 30%, capping USD gains in a tight 99.50-100.00 range.
The US Dollar Index (DXY) remains near the lower end of its 99.50-100.00 range as softer July CPI and PPI data reduce expectations for a Federal Reserve rate hike in September. Implied odds of a hike have fallen to nearly 30%, the lowest since the June FOMC meeting, limiting dollar upside despite geopolitical tensions.
Market participants await July retail sales and August University of Michigan sentiment data, though neither is expected to significantly alter Fed funds futures pricing. Retail sales are forecast at 0.1% month-over-month, while control-group sales, excluding volatile categories, are seen rising 0.3%.
Fed officials remain divided on inflation persistence, with recent data supporting a more cautious approach to further tightening. The dollar’s tight range reflects balanced risks ahead of key economic releases.