Dollar Bulls Face Challenge as Interest Rate Hikes Reach Limits

The US dollar has experienced a significant rise due to sharp interest rate increases. However, this trend may be reaching its limits as markets anticipate nearly 100 basis points of tightening over the next 12 months, including a nearly 2/3 chance of a hike late next month. This could challenge the dollar bulls, as the current momentum may not sustain itself.

The PCE deflator's methodological changes may have a dampening effect on price pressures. Additionally, US job and auto sales data will be released soon, which could influence market expectations. These factors suggest that the greenback's rise may not continue unchecked.