Investors await US inflation figures after the DXY stabilizes amid geopolitical tensions and mixed currency movements.
The US Dollar Index (DXY) traded cautiously near 99.90 on Tuesday as markets braced for Wednesday’s US Consumer Price Index (CPI) report. Inflation is expected to rise in May, adding pressure on the Federal Reserve’s policy outlook. Geopolitical risks, including escalating Middle East tensions, supported the USD after reports of a US helicopter downed over the Strait of Hormuz.
EUR/USD edged higher to 1.1550 despite the USD’s recovery, while GBP/USD climbed toward 1.3390. USD/JPY hovered near 160.30, a level that has previously triggered intervention. AUD/USD fell to 0.7030 following weak Australian consumer confidence data. Gold dropped below $4,250, and WTI crude oil declined to $87.90.
The European Central Bank is expected to raise interest rates on Thursday to combat inflation, further diverging from the Fed’s potential policy path. Traders remain focused on the CPI release for clues on the Fed’s next move.