US Dollar Index sees upside above 106.50 as US Inflation pre-anxiety triggers

• Pre-anxiety for Wednesday’s US CPI is supporting the DXY bulls.
• Softer oil prices have trimmed the consensus for the US Inflation rate.
• Higher US NFP has delighted the Fed for handling a higher inflation rate.

The US dollar index (DXY) is expected to conclude its pullback move sooner and may continue its upside journey if it manages to surpass the critical hurdle of 106.50 confidently. On Monday, the asset was corrected after printing a high of 106.45. The DXY defended the crucial support of 106.000 and picked bids significantly.

Lower consensus for US CPI

Considering the preliminary estimates for US Inflation, the price rise index will slip to 8.7% from the former figure of 9.1%. July’s softer oil prices are responsible for a downward shift in inflation consensus. The investing community is aware of the fact that the volatile oil prices were driving the price rise index higher. Now, downbeat oil prices are clearly diminishing the inflation forecasts Whereas the core CPI that doesn’t inculcate volatile oil and food products is expected to elevate to 6.1% from the prior release of 5.9%.

Winter may over for the Fed

The US Nonfarm Payrolls (NFP) remained upbeat last week despite lower investment by the US corporate players due to costly dollars after higher borrowing rates and a halt in the recruitment process by the same. Federal Reserve (Fed) policymakers were worried that the unavailability of support from the US labor data will escalate troubles in an already troublesome job. Now, the upbeat labor data along with exhaustion signals in the inflation rate will trim the concerns about handling a higher inflation rate.