Inflation Concerns Force Dollar To Edge Lower But It Does Not Lose Strong Momentum

The latest European trading session on Monday saw the dollar price take a slight fall. The dollar price took a downturn but it did not hold much significance for the sellers.

The dollar Price Remains Strong

Despite the recent pull, the dollar price has remained in the upper trading zone. It is yet to come out of the elevated zone before the sellers can rejoice.

As of now, the minor setbacks have no value to the sellers because they want to witness a significant selling spree instead of seeing a smaller one.

Feds’ Take on Interest Rate Hikes

The dollar may not steer fully into the negative territory because of the intervention of the US Feds involving the interest rates.

With the inflation rates data coming in stronger than expected, the Feds are determined to show no flexibility toward the interest rates.

The longer their hawkish take persists against the interest rates, the stronger the US dollar will become. This is exactly what the dollar is experiencing at the moment. Despite the fall, it has remained in a strong trading zone.

Taking the past few months efforts of the Feds in mind, the investors and the Feds had hoped the inflation rates would lower. This would allow them to make a positive decision pertaining to the interest rate hikes.

For the first time after several months, the interest rate hikes would be lowered or paused. However, the hot inflation data changed the scenario entirely.

The inflation data was higher than the predictions, so the Feds have no choice but to stay put with their policy.

Dollar Index Moved Lower

Due to recent developments, the trading value of the dollar has moved lower against the major currencies. Against the basket of six major currencies, the dollar’s trading price has pulled 0.1%.

Following the pull, the value of the dollar moved down to 105.105. Still, it is not a promising sight for traders wanting to see a drop in the dollar value.

Despite experiencing the dip, the dollar is still residing in the same territory as the seven-week high level, which is at 105.32. This was the high trading price that the dollar had achieved on Friday.

Last Week Performance

Last week’s performance was among the best for the USD in recent months. The dollar has been on the high horse for a very long time.

This is all thanks to the hot inflation data that keeps supporting the interest rate hike policy. As the Feds are not changing their decision, the dollar keeps finding strong footing and more strength versus the rest of the currencies.

For the past four weeks straight, the dollar price has continued gaining strong momentum. The dollar price has kept on pushing higher and things have become quite well for the traders.

The main reason why the Feds have been pumped is because of the PCE price index that has recorded a rise, which was not expected at all.

For January, the Feds had hoped to see the PCE price index go as high as 0.4% but it went to a high of 0.6%. This lets the Feds decide that it would be a great idea to remain hawkish against the interest rates.

Turns out, the bullish traders have yet another month to rejoice and increase their profits.

Dollar’s Movement against Major Currencies

As a result of the recent trading session, the trading price of the euro has pushed 0.1% higher against the dollar.

The dollar has recorded a 0.3% dip against the Japanese yen. The sterling value has recorded a 0.2% surge against the dollar while the Australian dollar has dipped 0.1% against the dollar.

Surprisingly, the dollar value has surged by 0.1% against the Chinese yuan. The dollar price versus the yuan now stands at 6.9638.