What does the latest US inflation report mean for the US dollar?

Gather around the campfire for a tale scarier than any ghost story. Picture this: The Federal Reserve is like a scarecrow, always threatening to lower interest rates but never doing so. This is what is happening in the market. Investors are waiting for a rate cut for the second year in a row, and it appears they will wait a little longer.

The latest inflation report for March scared everyone, showing consumer prices rising 3.5%, well above expectations. What does high inflation mean? This means that the Fed will keep interest rates high for longer to combat this situation. As soon as this data was released, you could practically hear the market’s collective gulp, with EURUSD and XAUUSD plunging right after.

Let’s take a look at the chart showing how these assets have performed since the start of the year. From this point of view, the drop is not significant, but noticeable.

But sometimes the most crucial thing lies beyond the board. Recent economic statistics (such as inflation and unemployment data), Fed meetings, and the overall strength of the U.S. economy have investors and pundits striking a different tone. These predictions about a rate cut in June? Yeah, it sounds more like a broken record. First it was fall, then winter, spring…and now even summer seems uncertain.

More and more analyst firms agree that we won’t see this rate drop until late summer or September. This means we will see a strong US dollar for some time to come. Additionally, other major central banks could begin cutting rates before the Fed. Frankly, it is too early not to consider the dollar as a rival.

We do not expect a major rise in the US dollar, as the market will depend on every word from the Fed. However, in the short term, especially during the summer months, expect increased volatility and complex market movements. So, keep an eye on the news and don’t do anything without serious analysis.


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