The US Dollar Index is slightly below its April peak at 104.80, while improved US Treasury yields, which increased by 0.66% to 4.29%, may support the dollar’s strength, as the yield on 10-year Treasury bonds rose.

The US economy’s strong performance and Eurozone’s growing economic distress support the strength of the US Dollar, suggesting a controlled and gradual downturn in the US economy.

The US Initial Jobless Claims report for the week ending September 2 showed 216K claims, lower than the revised 229K and higher than market expectations, potentially boosting the US dollar’s strength.

With every inflation indicator on the decline, US Treasury Secretary Janet Yellen expressed confidence in controlling inflation without significantly harming the labour market.

Chicago Fed Bank President Austan Goolsbee outlines the US Federal Reserve’s goal of achieving a “golden path” where inflation declines without triggering a recession, a challenging balance central banks strive for economic development and stability.

President John Williams of the Federal Reserve Bank of New York has expressed a cautious stance on US interest rate policies, citing a better economic equilibrium and decreased inflation, suggesting a potential delay in a rate hike later this month.

Investors anticipate the Fed to maintain high interest rates for a long time and potentially raise rates by 25 basis points by the end of 2023, potentially supporting the USD further.

It is anticipated that the US Consumer Price Index (CPI) release in August will offer useful insights into prospective inflation scenarios and could affect investor choices about the US dollar.

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