DBS Warns USD Long Positions Vulnerable After CPI Surprise

DBS Group Research economist Philip Wee has cautioned that speculative long positions in the US Dollar (USD) are looking increasingly vulnerable. The warning comes after June's US Consumer Price Index (CPI) release, which surprised on the downside, raising questions about the sustainability of recent dollar strength.

According to Wee, the market may be overestimating the resilience of the USD, as the softer inflation print undermines the case for further aggressive tightening by the Federal Reserve. This shift in expectations could trigger a pullback in dollar longs, leading to a reality check for bullish traders.

The remarks underscore the sensitivity of FX markets to incoming US economic data, with the CPI surprise potentially altering the near-term trajectory for the greenback.