Euro Rises Slightly, Dollar Awaits CPI
The euro strengthened slightly against the US dollar in European trading on Tuesday (July 14th). EUR/USD rose to around 1.1395, boosted by a weaker dollar ahead of the release of US inflation data for June.
The US Dollar Index (DXY) weakened 0.13% to around 101.15. The market is cautious as the US CPI data will be a key indicator of the Fed's future interest rate policy direction.
Investors are increasingly focused on inflation after the June FOMC minutes showed that Fed officials still view high inflation as a key risk. Fed Governor Christopher Waller also warned that the central bank would need to consider tightening policy if core inflation flares up again.
Markets expect US headline inflation to fall to 3.8% annually in June from 4.2% in May. Meanwhile, core CPI is expected to remain stable at 2.9% annually. On a monthly basis, headline inflation is projected to fall 0.1%, while core inflation is expected to remain elevated at 0.2%.
In addition to the CPI data, investors are also awaiting Fed Chairman Kevin Warsh's testimony before Congress. However, Warsh is not expected to provide clear guidance on interest rates, as he previously emphasized that forward guidance is not appropriate for the current policy environment.
From the European side, the market is still looking for signs of whether the European Central Bank will raise interest rates again this year. MUFG analysts predict the ECB could raise rates by 25 basis points in September. Consequently, EUR/USD still has the potential for volatility, especially if US CPI data comes out differently than market expectations. (arl)
Source: Newsmaker.id
