The USD index has been rising for the ninth consecutive session
The US dollar looks steady on Tuesday, with investors gearing up for US inflation report due later today. The USD index keeps treading water around the 100.00 psychological level, refraining from a bearish correction despite the overbought conditions. The index has been rising for the ninth consecutive session. The buck remains well supported by a risk-off tone dominating global financial markets amid geopolitical and economic concerns.
Also, the US currency keeps following yields amid the ongoing sell-off in the bond market. US 10-year Treasury yields exceeded 2.79%, reaching its highest level since January 2019, fueled by concerns that rising inflation and the Federal Reserve’s plans to aggressively hike rates could dent economic growth.
The CPI is expected to rise to 8.4% from 7.9% amid a spike in energy prices in the wake of Russia’s military operation in Ukraine. Red-hot figures would add to worries about Fed’s too hawkish plans on monetary policy tightening and could add to bullishness surrounding the greenback. Of note, the New York Fed survey showed on Monday that one-year inflation expectations rose to 6.6% from 6.0% while year-ahead spending growth jumped to 7.7% from 6.4%. After the CPI report, Biden will speak on ‘lowering costs’, which could add to short-term volatility in the financial markets.
As for the EURUSD pair, the euro is expected to stay pressured after another failed attempt to stage a bounce that was capped in the 1.0930 area on Monday. As such, the common currency is back below the 1.0900 figure and could threaten the 1.0800 mark if the 1.0830 intermediate support gives up anytime soon. However, the pair could regain some ground later in the week if the ECB meeting brings some hawkish signals amid the rising inflation in the Eurozone.