The U.S. dollar remained stable on Monday but is poised for its first monthly decline this year. Investors are waiting on key inflation data from the U.S., Europe, and Japan to get a clearer picture of global interest rate movements.
Recent economic data in the U.S. has been mixed, leading to uncertainty about the Federal Reserve’s plans for raising interest rates. This has dampened enthusiasm for the dollar, which had previously benefited from its relatively high yield compared to other currencies.
Focus this week is on inflation data releases. A significant rise in inflation figures, particularly in the U.S. core PCE index, could bolster the dollar. Conversely, a sustained decline in inflation could trigger further dollar weakness and increase expectations of a Fed rate cut later this year. The European Central Bank is still expected to ease policy next week despite forecasts for slightly higher inflation in the eurozone.
Source: Reuters