Dollar Index Stalls Near 100.00 Amid Fading Rate Hike Bets

The U.S. Dollar Index (DXY) is trading near the 100.00 psychological level, pausing after a modest bounce triggered by the latest Consumer Price Index (CPI) data.

Market expectations for further Federal Reserve rate hikes continue to recede, with money markets now pricing in a higher probability of a rate pause at the July meeting.

The CPI data showed that headline inflation rose 3.1% year-over-year in June, down from 4.0% in May, marking the smallest annual increase since March 2021.

Jane Foley, senior FX strategist at Rabobank, said 'the market is increasingly convinced that the Fed will pause after a likely July hike.'