US Dollar Index Holds Firm Above 99.00 Ahead of Key US CPI Report

The US Dollar Index (DXY) continues its upward momentum for the second consecutive session, trading around 99.10 during Wednesday’s Asian trading hours. Traders are closely watching the upcoming US Consumer Price Index (CPI) data, which is expected to show a 2.5% year-over-year increase in May, providing fresh insight into inflationary pressures.

Tariff Relief Boosts USD Sentiment

The greenback is gaining strength amid signs of easing trade tensions between the United States and China. On Tuesday, US Commerce Secretary Howard Lutnick stated that both nations have reached a preliminary framework under the Geneva Consensus, signaling constructive dialogue. China’s Vice Commerce Minister Li Chenggang confirmed open and rational communication with the US and mentioned he will present the framework to Chinese leadership for approval. However, final implementation awaits confirmation from top officials on both sides.

Bond Yields Steady as Traders Eye Inflation

US Treasury yields are holding steady as market participants await the inflation figures. The 2-year Treasury yield remains around 4.01%, while the 10-year yield trades near 4.46%, reflecting cautious optimism. The CPI data will offer vital clues regarding the impact of tariffs on prices and potential adjustments to Federal Reserve policy.

Trump Tariff Enforcement Gets Legal Backing

Adding to the bullish sentiment for the dollar, the US Court of Appeals has extended a temporary stay, allowing the government to continue enforcing Trump-era tariffs. This move follows a recent lower court decision to block the tariffs. The extension supports ongoing trade measures as the legal battle continues.

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Key Takeaways:

• US Dollar Index (DXY) trades above 99.00 ahead of CPI data.
• May CPI expected to rise 2.5% YoY, influencing Fed rate outlook.
• US-China trade talks show progress, supporting USD strength.
• US Court of Appeals allows continued enforcement of Trump’s tariffs.
• Treasury yields remain stable ahead of key inflation report.

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