Dollar Index Bounces Back Amid Soft CPI, Euro Faces Decline
The US Dollar index has rebounded despite a softer Consumer Price Index (CPI) release yesterday, indicating near-term bullishness on a break above 100. However, the Euro and other major currencies may decline in the short term.
The EUR/USD pair could fall towards 1.15 and lower, while the Aussie and Pound may test their respective support levels at 0.70/69 and 1.33 before being rejected. Meanwhile, USDJPY can aim for 160-161 while above 159.
The US Treasury Yields remain low but have room to test their support and resume their broader uptrend eventually. The recent data release showed a sharp decline in the US Headline CPI to 3.3% (YoY) in July from 3.46% in June, which has kept yields lower.
The German Yields have bounced back from their lows, with supports limiting their downside. The outlook remains bullish for yields, and they can rise more. Global equities are mixed, with the Dow drifting lower towards 53,000 while continuing to trade within a broad range of 53,000-55,000.