Softer Inflation and Fed Debate Cap Dollar Upside, OCBC Analysts Say
OCBC analysts note that softer US inflation and uncertainty over the Fed’s reaction function are blunting the dollar’s upward momentum, with upcoming employment data seen as critical.
Christopher Wong and Sim Moh Siong of OCBC highlight that the US dollar’s recent upside has been constrained, even as the Federal Reserve maintains a data-dependent stance. They point to softer inflation readings and rising debate around how the Fed will calibrate policy as key factors eroding momentum.
With the market reassessing the reaction function, the dollar has struggled to build on earlier gains. The analysts see the upcoming US employment releases as pivotal for near-term policy expectations.
These jobs figures will likely set the tone for the dollar’s next move, given the Fed’s continued reliance on incoming data.
Source: FXStreet Forex News