Forex
Dollar Consolidates Near 99.30 Amid Market Skepticism and Oil Price Surge
The US Dollar Index has been trading in a consolidation range of 98.25 to 99.80 since mid-August, showing signs of fatigue after recent highs.
Despite stronger-than-expected inflation data and aggressive rate-hike pricing, which saw CME FedWatch probabilities for a quarter-point rate hike at the upcoming September 16 meeting spike to ~86-87%, the market remains skeptical of follow-through duration or views the hike as peak-hawkish pricing.
The dollar has been unable to break out of its range, with trading near 98.88-99.30 on September 14, and Brent oil prices have risen above $107/bbl due to geopolitical supply risks, adding secondary stagflationary/inflationary input costs.