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The U.S. dollar index (DXY) was modestly lower at 105.35 at the midpoint of the U.S. session on Monday. Strength in markets and the Federal Reserve’s (FED) hawkish stance on interest rate cuts limited the dollar’s losses. Whether the dollar can rebound will mainly depend on major U.S. data this week, especially the Consumer Price Index (CPI) for April released on Wednesday.
The U.S. economy continued to show strong growth momentum in the second quarter, providing support for the dollar’s rebound following cautious comments from the Federal Reserve. Signals suggesting there would be no imminent rate cuts have calibrated market easing expectations, fueling a more hawkish outlook. Fed officials’ stance, while cautious, is largely data-driven, with key indicators such as CPI and retail sales set to be released this week driving market movements.
