The US Dollar Index (DXY) experienced its first daily decline in three days, trading sideways near 102.45. This indicates a cautious market amidst inflation statistics from the Consumer Price Index (CPI) for July, affecting the Greenback’s gauge against six main currencies.
US inflation statistics are gaining significance due to the recent Nonfarm Payrolls letdown and the decline in MBA Mortgage Applications. The CME Group Fed Watch Tool suggests an 86.0% chance that the Federal Reserve will stop raising interest rates at its September meeting.

The Nonfarm Payrolls report’s letdown makes US inflation data crucial. MBA Mortgage Applications have fallen for three consecutive weeks, testing the DXY bulls. The CME Group Fed Watch Tool suggests an 86.0% chance of the Federal Reserve pausing interest rate increases at its September meeting.

US Treasury bond yields fell, causing economic difficulties and dragging down the DXY, despite the Fed’s concerns and the first weekly decline in four weeks.
Global rating agencies’ crackdown on banks and economic concerns from China, Europe, and the UK impact public opinion, providing a foundation for the US Dollar Index.

US President Biden signed a law granting the Treasury Department authority to restrict US investments in Chinese businesses. Wall Street’s closing price was negative, US Treasury bond rates fell, and S&P 500 futures gained before press time. It’s crucial to monitor US CPI and Core CPI for July amid dovish Fed fears, potentially prolonging the DXY’s recent fall. Market predictions suggest an increase in headline CPI to 3.3% YoY, while Core CPI may remain unchanged at 4.8%.

Technical view
The US Dollar Index declines from a five-week-old falling resistance line to 102.55, while the 100-DMA and rising support lines present resistance for DXY bears.

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