USD Holds Steady Ahead of Critical Inflation Data

The US Dollar (USD) is holding steady ahead of the highly anticipated Consumer Price Index (CPI) data release, scheduled for 12:30 GMT. The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, remains flat at around 99.85.

Analysts at Brown Brothers Harriman expect a modest increase in July CPI, forecasting headline inflation to rise by 0.1% month-over-month and ease to 3.4% year-over-year. Core CPI is seen rising by 0.2% m/m and easing to 2.5% y/y.

A soft US CPI reading would likely strengthen the case for a dovish repricing in Fed hike expectations, undermining the USD and boosting risk assets. Conversely, a hot US CPI would lead to a knee-jerk USD bounce via higher front-end yields.