Ella 
The US dollar (USD) concluded the week with minimal change, maintaining its strength following a sharp surge recorded in the previous week, which saw the USD Index (DXY) reach new five-month highs around 106.50 on April 16.
The weekly performance of the US dollar was closely tied to investor evaluations of recent US inflation data, with the Consumer Price Index (CPI) surpassing expectations in March. This unexpected slowdown in disinflationary pressures not only underscores the resilience of the economy but also suggests that the Federal Reserve (Fed) may prolong its current stance of maintaining tighter monetary policies.
Furthermore, robust labor market conditions reinforce the perception of a strong economy, supporting the notion of a “soft landing” scenario and potentially delaying the expected timing of the first rate cut.
Fed Rhetoric and Interest Rate Trajectories:
Fed policymakers have been vocal throughout the week, advocating for prolonging the current restrictive stance. Atlanta Federal Reserve Bank President Raphael Bostic and New York Federal Reserve Bank President John Williams highlighted the strength of the economy and the gradual nature of inflation, suggesting no rush to implement rate cuts.
Fed Governor Michelle Bowman noted uncertainties regarding inflation reduction efforts and emphasized the Fed’s data-driven approach to policy adjustments.
Chairman Jerome Powell’s recent remarks indicate a cautious approach to rate cuts, aligning with market expectations for a delayed easing cycle.
