DBS: Strong NFP, May CPI Projection to Support USD into June FOMC

DBS Group Research analyst Philip Wee argues that the US Dollar is likely to remain supported into the June Federal Open Market Committee (FOMC) meeting, citing strong March nonfarm payrolls and a projected rise in May CPI to 4.2% year-over-year. The combination of a tight labor market and elevated inflation expectations reduces the case for early rate cuts, underpinning the greenback.

The Federal Reserve's latest stress test results also factor into the outlook, as they influence bank capital requirements and broader financial conditions. Wee notes that these developments shape the path for the USD as markets await the next policy decision.

Traders will now focus on upcoming US economic data and the Fed's communications for further direction, with the June FOMC meeting serving as a key catalyst for currency markets.