ING warns US GDP and core PCE data could trigger a USD correction toward 100.50 if downside surprises emerge before September FOMC.
The US Dollar retreated after the Federal Reserve’s latest press conference left markets interpreting a softer stance on inflation, reducing expectations for further tightening. Real yields fell 7 basis points, pressuring the USD as investors sensed the Fed may rely on market-driven tightening rather than additional hikes.
The US Dollar Index (DXY) has climbed 60 basis points since the June FOMC meeting, but ING cautions it may correct to 100.50 ahead of the September decision. Upcoming US GDP and core PCE data will be critical in determining whether the Fed proceeds with another rate increase.
With Fed guidance limited until September, economic prints—including two CPI reports and jobs data—will dictate whether the DXY has peaked for the year. Markets now await these releases to gauge the Fed’s next move.