Dollar Edges Lower After CPI, Heading for Third Weekly Loss
The US dollar weakened slightly on Friday after the January inflation report showed softer-than-expected price pressures. The Dollar Index (DXY) fell around 0.1% to 96.87 and remains headed for a weekly decline of approximately 0.6%, as markets increase the likelihood of a Fed rate cut this year.
The main driver came from the US CPI: headline inflation was recorded at 2.4% year-on-year (below the consensus of 2.5% and down from 2.7% in December), while the monthly increase of 0.2% was also lower than the previous month. However, the core CPI remained in a "sticky" range, signaling not "inflation is settled," but rather "a gradual decline."
JPMorgan believes this CPI release points to a more gradual cooling of the core PCE (the Fed's favorite inflation indicator)—making the Fed likely to remain wait-and-see unless there is a surprising weakening in the labor market. The market is also still weighing the impact of tariff policy, which could curb inflation declines throughout the year.
In Europe, the euro remained relatively calm. EUR/USD held steady after preliminary estimates showed the eurozone economy grew 0.3% quarter-on-quarter in the fourth quarter of 2025 (also 0.3% for the European Union), providing a cushion for sentiment even as markets await further hard data.
Meanwhile, the yen was in the spotlight this week: USD/JPY was relatively flat around 152, but on a weekly basis the dollar fell around 2.8% against the yen, reflecting strong demand for the yen following more assertive comments from Japanese officials. (yds)
Source: Newsmaker.id
