DXY HOLDS BELOW 100 AS SOFTER PPI SHIFTS FED RATE EXPECTATIONS
The US Dollar Index traded near 99.90 during Friday’s Asian session as softer US producer inflation data prompted markets to reassess the Federal Reserve’s near-term policy outlook.
The Producer Price Index was unchanged in July, below expectations for a 0.2% monthly increase, while June was revised to a 0.1% decline. Core PPI rose 0.2% month-on-month, also below the 0.3% forecast. On an annual basis, headline and core PPI increased 4.7% and 4.2%, respectively.
According to CME FedWatch data cited in the supplied commentary, markets now assign a 34.8% probability of a September rate increase, compared with around 40% immediately after the PPI release. These figures represent market-implied expectations rather than confirmed Federal Reserve policy.
US labour data also drew attention, with Initial Jobless Claims rising to 209,000, above the previous 200,000 and the 204,000 estimate. Richmond Fed President Tom Barkin said it remains an open question whether further tightening will be needed to return inflation to target, highlighting continued uncertainty around the policy path.
Technically, DXY remains just above its 100-day moving average at 99.75, while the 14-day RSI near 42 indicates softer momentum without reaching commonly referenced oversold territory. The nearest upper references are 100.40 and 101.80, while 99.75 and 99.00 remain the key lower technical levels.
Market attention now turns to US July Retail Sales, with Federal Reserve expectations and the 99.75–100.40 technical area remaining important near-term references for the US Dollar Index.
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