Looking forward to the upcoming holiday-shortened week, analysts at ING are anticipating a solid print on US inflation, affecting the outlook for the US Dollar (USD).
Expectations for DXY to Rise Towards 105.00
Although Friday marks a public holiday in many regions, it holds significance due to the release of the US core PCE deflator for February. Forecasts point to a consensus of 0.3% month-on-month, falling short of the Fed’s disinflation narrative.
However, the week also brings several Fed speakers into focus. Christopher Waller’s Wednesday speech and Fed Chair Jerome Powell’s remarks on Friday are particularly noteworthy. Investors are keen to hear if the Fed addresses concerns regarding early-year inflation prints appearing stronger due to seasonal factors, as hinted by Chair Powell during last week’s FOMC press conference.
The robust performance of the US stock market and its impact on confidence and consumption pose challenges for Dollar bears. While the DXY could surge towards the 105.00 level, ING maintains that this strength may be short-lived, favouring a downtrend in the second quarter.