ING analysts Chris Turner notes the US Dollar (USD) starts the week slightly offered as investors focus on positive geopolitical and political developments, but highlights that high Oil prices and elevated rates keep risks alive. Turner argues the Federal Reserve (Fed) is unlikely to signal an inflation all-clear and see this as mildly supportive for the Dollar and US Dollar Index (DXY) near 98.50.

Fed stance keeps Dollar underpinned

"Faced with rising energy prices and higher inflation, and both consumption and employment holding up, the Fed will have to tread carefully to avoid making the mistakes of 2022."

"There is no way the Fed is in a position to signal the 'all-clear' on inflation, and with equity markets at their highs, the Fed may be inclined to warn of the need for rates to stay unchanged for longer."

"DXY is offered again on the Iranian news, but with oil prices staying high and central banks yet to react, we caution against chasing it lower again too soon."

"On a quiet Monday, we do not expect it to stray too far from the 98.50 area."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)