US Dollar Index gives back some early gains, US CPI data awaited

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The US Dollar (USD) surrenders half of its early gains during the European trading session at the start of the week, with the US Dollar Index (DXY) dropping to near 98.00 from the intraday high of 98.15.

The US Dollar Index gives up half of its early gains, but still remains higher at around 98.00.
US President Trump rejects Iran’s response to the peace proposal, calling it “totally unacceptable”.
Investors await the US CPI data for fresh cues on the Fed’s monetary policy outlook.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.13%	0.24%	0.27%	-0.06%	0.09%	0.33%	0.20%
EUR	-0.13%		0.11%	0.11%	-0.22%	-0.03%	0.21%	0.07%
GBP	-0.24%	-0.11%		0.00%	-0.32%	-0.14%	0.10%	-0.05%
JPY	-0.27%	-0.11%	0.00%		-0.32%	-0.13%	0.09%	-0.06%
CAD	0.06%	0.22%	0.32%	0.32%		0.19%	0.37%	0.26%
AUD	-0.09%	0.03%	0.14%	0.13%	-0.19%		0.22%	0.09%
NZD	-0.33%	-0.21%	-0.10%	-0.09%	-0.37%	-0.22%		-0.12%
CHF	-0.20%	-0.07%	0.05%	0.06%	-0.26%	-0.09%	0.12%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The Greenback started the week on a positive note as a sharp recovery in the oil price, following United States (US) President Donald Trump’s rejection of Iran’s counter demands against Washington’s peace proposal, improved the appeal of the US Dollar.

In the last few months, the US Dollar has performed strongly as the oil price gained sharply due to the closure of the Strait of Hormuz, which led to a significant jump in global inflation expectations, and weakened expectations of interest rate cuts by the Federal Reserve (Fed) this year.

Over the weekend, US President Trump said in a post on Truth Social, “I have just read the response from Iran’s so-called “Representatives.” I don’t like it — TOTALLY UNACCEPTABLE!”

A report from CNN showed that Iran wants the recognition of its sovereignty over the blockaded Hormuz and compensation for war damages.

Diminished hopes of a permanent US-Iran resolution have also improved the safe-haven demand of the US Dollar.

Meanwhile, investors await the US Consumer Price Index (CPI) data for April, which will be released on Tuesday. The inflation data is expected to have a significant impact on the Fed’s monetary policy expectations. The CPI report is expected to show that the headline inflation rose to 3.4% from 3.3% in March.

Economic Indicator

Consumer Price Index (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

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