The Greenback, when tracked by the US Dollar Index (DXY), abandons the area of monthly peaks and recedes toward the 101.30 zone on turnaround Tuesday.
A test of the YTD peaks remains in place The US Dollar’s correction comes after three consecutive daily advances and seems to have met a tough nut to crack in the 101.60-101.70 band, a region close to its yearly highs around 101.80 recorded in late June
Despite the daily pullback, the index continues to trade well above its key 200-day SMA, keeping the short-term constructive outlook in place and allowing for extra advances down the road. Oil, yields and inflation Cooling tensions in the Middle East have been collaborating with the severe pullback in crude oil prices. That said, prices for a barrel of the American benchmark for sweet light crude oil (WTI) have retreated for the third consecutive day, breaching the key $80.00 mark and hitting new two-week troughs.
By the same token, inflation fears seem to have shrunk a tad, motivating US Treasury yields to extend their corrective move across the spectrum, all at the time when market participants continue to assess the potential Fed rate path prior to the FOMC event on Wednesday. On the latter, the central bank is widely anticipated to keep its hand steady once again, leaving its Fed Funds Target Range (FFTR) intact at 3.25%-3.75%. Meanwhile, US inflation is expected to gather all the attention of the media questions, particularly in light of the softer-than-expected CPI data in June and the current cooling of geopolitical effervescence and its impact on consumer prices going forward.