Ella 
The U.S. Dollar Index builds on Tuesday’s modest gains to test 104.80 again
Investors continue to believe the Fed will cut interest rates in the second quarter of 2024.
Later in the day, US inflation data will be the focus of the market.
The U.S. dollar index (DXY) shows USD/JPY extending Tuesday’s slight rebound, rising to around 104.80.
The U.S. dollar index rose amid a slight rebound in U.S. bond yields, with the 2-year yield exceeding the 5% threshold. At the same time, there are strong market expectations that the Federal Reserve may begin to cut interest rates in the second quarter of 2024.
Meanwhile, investors will be keeping a close eye on U.S. inflation data for August, with headline CPI expected to move higher and core CPI lower.
Additionally, last week’s mortgage applications, typically tracked by the MBA, will be released ahead of the EIA’s U.S. crude oil inventory report.
The U.S. dollar index extended its rebound from Monday’s apparent pullback and regained the 104.75/80 range ahead of key U.S. inflation data on Wednesday.
At the same time, the good health of the U.S. economy still provides support for the dollar, although the Fed’s “tight-long” stance appears to have weakened amid the current backdrop of ongoing deflation and cooling labor markets.
