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Dollar Turns Lower With Yields Ahead of US Inflation Figures

Published 07/10/2024, 10:24 AM

Markets are a bit slow and are not moving much despite Powell's testimony yesterday and today. So far, Powell hasn't brought anything new. He mentioned that they need more confidence before lowering interest rates, but they are on the right path in this disinflationary environment. 

We will see if some volatility returns today or possibly tomorrow, when the key driver for the markets this week, inflation figures, can change the flows.

Also, we got the interest rate decision from New Zealand earlier today. They didn't change the policy rate but mentioned that they are seeing signs that inflation could soften over the next few months. As a result, the Kiwi pulled back, but this may just be a temporary impact because a lot of FX pairs can be driven by weak US dollar

Looking at the dollar index, we are still seeing nice ongoing intraday weakness confirmed by lower US yields, as shown on the 1-hour chart below. In fact, on DXY, we see wave 4 just testing the base channel resistance around 105.00 to 105.20, from where more weakness can be expected.
USD Hourly Chart

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