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US Dollar (DXY) Treading Water as US Inflation Report Nears

US Dollar Price, Chart, and Analysis

  • US 2-year yields steady after their recent rally.
  • US headline inflation is expected to hit 6.8% in November.

The US dollar is currently biding its time ahead of the latest look at US inflation on Friday which is expected to show price pressures hitting a fresh 30-year high. Over the recent weeks, the yield on the interest-rate sensitive US 2-year has moved sharply higher with traders currently pricing in a 100% chance of two 0.25% rate hikes next year and a 92% of three hikes. Next Wednesday’s FOMC rate decision and the latest dot plot will guide the US dollar over the next few months.

US Dollar (DXY) Treading Water as US Inflation Report Nears

US headline inflation is currently running at a 30-year high of 6.2% and this is expected to rise further when the November inflation figures are released tomorrow. The market currently expects core US inflation to hit 6.8%, a fresh three-decade high, while the core figure is seen rising to 4.9% from 4.6% in October.

Headline US Inflation

US Dollar (DXY) Treading Water as US Inflation Report Nears

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US Dollar (DXY) Treading Water as US Inflation Report Nears

The daily US dollar (DXY) chart shows that the recent multi-month trend resistance line has now turned to support and the greenback is currently testing this trend support. The pattern of higher lows and higher highs from mid-2021 remains in place and this will likely remain the case over the coming months. Any sell-off will look to 95.50 for initial support and this level may prove difficult to break barring any unforeseen news. The US dollar is currently attempting to reclaim the 20-day simple moving average (96.09) and a break and hold above here will set up the greenback for a push to the 96.56/58 level.

US Dollar (DXY)Daily Price Chart December 9, 2021

US Dollar (DXY) Treading Water as US Inflation Report Nears

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.