ING strategists see upcoming Fed commentary and Jackson Hole as key catalysts for a potential dollar decline amid overstated tightening bets.
The US dollar remains broadly stable in a low-volatility summer environment following the latest CPI report, according to market strategists. FX volatility has been suppressed, but expectations for further Federal Reserve tightening may be overestimated, creating room for dollar weakness.
Recent inflation data leaned dovish without delivering a clear signal, leaving markets uncertain ahead of the late-August Jackson Hole Symposium. Second-tier US data, including July retail sales and University of Michigan surveys, are unlikely to move the dollar unless they surprise significantly.
Strategists highlight Fedspeak as the most immediate catalyst for market shifts, with potential implications for relative-value trades. Meanwhile, geopolitical developments in the Middle East continue to drive headline fatigue but have limited direct impact on FX markets.