The U.S. dollar has maintained stability near a three-week high, driven by cautious monetary policy expectations from the Federal Reserve. Inflation is anticipated to rise over the summer, with headline CPI projected at 2.7% year-over-year and core inflation at 3.0%. While traders expect two rate cuts by year-end, a softer inflation reading could influence market dynamics. Additionally, political risks, including criticism of Fed Chair Jerome Powell by President Trump, have added uncertainty to the monetary policy outlook and market behaviors surrounding currency and yields.
The U.S. dollar remained relatively steady near a three-week high on Tuesday, supported by expectations of a more cautious monetary policy.
Traders could continue to see the Federal Reserve delay rate cuts, as price pressures linked to trade tariffs persist.
Fed Chair Jerome Powell recently stated that inflation is likely to rise over the summer, reinforcing the case for holding rates steady in the near term.
Political risk also lingered, as President Trump renewed criticism of Powell, reiterating that rates should fall below 1%.
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