The US dollar index is blocked below resistance level, and the market is waiting for US CPI data

On Thursday, the US dollar index remained weak, and the US dollar rose and fell on Wednesday, but the volatility was not large and the trend lacked a clear direction. Previously released data showed that the US producer price index (PPI) unexpectedly declined in August, further consolidating market expectations that the Federal Reserve will restart interest rate cuts this month. Investors' focus is shifting to Thursday's CPI data.

Analysis of major currencies

United States dollar: As of press time, the US dollar index hovered around 97.82. The US dollar index fluctuated after the release of PPI data. It closed at 97.83 on Wednesday, an increase of only 0.08%, and has fallen by nearly 10% this year. This weak trend is mainly affected by chaos in U.S. trade and fiscal policy and increased concerns about the independence of the Federal Reserve. Technically, the US dollar index is currently fluctuating below the resistance level of 97.859, and the rebound caused by producer price index data on Wednesday failed to break through the 50-day moving average of 98.100 (50-daySMA) and the horizontal resistance level of 98.317. Since mid-August, the range has repeatedly suppressed the rise of the US dollar, causing the short-term market to maintain a "neutral bearish" approach. At present, the US dollar index fluctuates and consolidates within the range of 97.253 to 98.834, and the 50-day moving average is a key real-time hub. The CPI of the Consumer Price Index will be a catalyst to determine the direction of the US dollar index. Before that, traders should expect that a breakthrough will occur only when the price clearly breaks through this range.

Euro: Up to press time, EUR/USD hovered around 1.16998, and on Wednesday, EUR/USD remained stable around 1.1700, and market participants were digesting U.S. economic data. The weakening of the dollar has allowed the pair to trade within familiar levels as inflation reports are weak and expectations for the Fed's first rate cut. Fitch rating agencies expect to cut interest rates by 25 basis points in September and December, and expect to cut interest rates three more times in 2026. Instead, the rating agency did not predict further rate cuts by the European Central Bank. After the data is released, traders expect the probability of the Fed's 25 basis points cut rate is 90%, and the probability of a 50 basis points cut rate is 10%, according to the PrimeMarketTerminal interest rate probability tool. The ECB may keep interest rates unchanged at a probability of 93%, and the probability of a 25 basis point cut is only 7%. Technically, the euro/dollar fell for two consecutive days, causing the pair to fall below 1.1700. However, strong support levels are at the intersection of the 20-day and 50-day simple moving averages (SMA), at 1.1672 and 1.1659, respectively. Although the Relative Strength Index (RSI) shows bullishness, buyer momentum is weakening, with RSI falling from 60 to 52, and sellers focus on the neutral line of 50. If the EUR/USD breaks above 1.1700, it is expected to move towards 1.1750, followed by 1.1788 on July 24. If the latter is broken, the levels of 1.1800 and 1.1829 will be exposed.

GBP: As of press time, GBP/USD hovered around 1.3530, GBP/USD rose slightly on Wednesday, and the market was waiting for the latest inflation update. Inflation of the U.S. Producer Price Index (PPI) slowed in August, strengthening market expectations for the Federal Reserve to cut interest rates next week. U.S. Consumer Price Index (CPI) inflation will be announced on Thursday, which could qgrse.cnplicate the Fed's path to further cut rates. U.S. Consumer Price Index (CPI) inflation is expected to rise to 2.9% again in the year ended in August. The core CPI is expected to remain at an annual rate of 3.1%, still above the Fed's 2% inflation target. According to CME's Fed Watch tool, the interest rate market expects the probability that the Fed will cut interest rates by 25 basis points next week is more than 90%. Technically, the GBP/USD continued to consolidate around the weekly high of 1.3590 on September 9, but the buyer failed to decisively break through the 1.3550 area, opening the door for further downward trend. The Relative Strength Index (RSI) remains bullish, but as it flattens, the pair may hover around 1.3500-1.3550, awaiting U.S. CPI data. A breakthrough of 1.3590 will expose 1.3600, with the next key resistance at 1.3681, the high on July 4. On the other hand, a break below 1.3500 will expose the 20-day simple moving average (SMA) 1.3491, followed by a 50-day SMA1.3465.

Summary of news from the foreign exchange market

1. Swiss National Bank Governor: Return to negative interest rates if necessary

Swiss National Bank Governor Schlegel said that if it is indeed necessary, the central bank will not avoid reducing borrowing costs below zero. With just two weeks left before the quarterly rate resolution, Schlegel stressed that he and his colleagues are ready to return to the policy stance that they exited three years ago if necessary. At that time, decision makers will decide whether to maintain the current 0% interest rate level. "If it is really necessary, we won't hesitate." Several officials, including Schlegel, previously said that the threshold for interest rate cuts is higher than other policy adjustments because negative interest rates may have adverse effects on pensions and the financial system. Most economists expect policy makers to keep interest rates unchanged at their Sept. 25 meetings; a few predict a 25 basis point cut to -0.25%.

2. The United States was exposed to pressure the EU to tax China and Russia

The British Financial Times quoted three well-known officials on the 10th that US President Trump demanded that the EU impose up to 100% tariffs on India and China as a means to put joint pressure on Russia to end the Russian-Ukrainian conflict. International experts said in an interview on the 10th that the United States lacks enough strength to win this tariff war alone, so it is trying its best to tie Europe to the strategic track of the United States, but this may intensify the game between the United States and Europe. India's New Delhi TV cited the Financial Times as saying that when senior European and American officials discussed the income to qgrse.cnbat Russia to maintain the war in Washington on the 9th, Trump intervened in the meeting and put forward the above request. A U.S. official said: "President (Trump) came here this morning. His point is that the obvious approach now is to let us all impose high tariffs and then maintain such high tariffs until the Chinese agree not to buy (Russia) oil. (Russia) really has no more places to export. "

3. The U.S. Department of Labor launched a review of the Bureau of Labor Statistics to focus on employment data, etc. On September 10, local time, the U.S. Department of Labor's Inspector General's Office issued a statement announcing that it has launched a review to evaluate the challenges faced by the Bureau of Labor Statistics in the process of collecting and reporting economic data. The Office of the Inspector General pointed out in a statement that the Bureau of Labor Statistics had previously announced that it would reduce the collection of data on two inflation indicators that play a key role in the U.S. economy, namely the Consumer Price Index (CPI) and the Producer Price Index (PPI). In addition, the Bureau of Labor Statistics recently lowered the estimate of the number of new jobs in the monthly Employment Situation Report. The Office of the Inspector General said the review will focus on challenges and related optimization strategies: collecting PPI and CPI data; collecting and reporting monthly employment data, including data revisions.

4, The judge prevented the removal of Federal Reserve Director Cook, and the Trump administration appealed quickly

The Trump administration took quick action on Wednesday to appeal a federal judge's previous ruling to temporarily prevent him from removing Federal Reserve Director Cook. The move aims to advance Trump's move to remove Cook from office. The U.S. Department of Justice filed a brief notice formally appealing the ruling of U.S. District Court Judge Ja Cobb on Tuesday night. In his ruling, Justice Cobb pointed out that Trump claimed that Cook had qgrse.cnmitted mortgage fraud before taking office, but this reason is likely not enough to constitute a legal basis for dismissal. Cobb's interim injunction prohibits the Federal Reserve from executing the termination process of Cook until the trial of his lawsuit is over. Before the Justice Department filed an appeal, White House spokesman Kush Desai said Trump had removed Cook from his post on legitimate reasons in accordance with the law, saying that "this ruling will not be final." The case is likely to eventually be submitted to the Supreme Court for trial, and the result will far-reachingly affect the Federal Reserve's ability to independently formulate interest rate policies and not be subject to political interference.

5. US PPI fell unexpectedly, US Treasury bonds jumped

U.S. Treasury bond prices rose. The previously released US PPI data was weaker than expected, consolidating the bet for interest rate cuts. The yield on the two-year Treasury bond fell four basis points to 3.52%, while the yield on the 10-year Treasury bond fell two basis points to 4.07%. The yield on the U.S. two-year Treasury bonds is closely related to the Fed's expected policy. The U.S. Bureau of Labor Statistics reported Wednesday that the producer price index fell 0.1% from the previous month. This is the first decline in four months. "This makes the Fed's 25 basis points cut next week like a dunk (lose to a sure-fire)," said Andrew Brenner, head of international fixed income at NatAlliance Securities. "Unless CPI falls unexpectedly, we won't see a 50 basis point cut, and we don't have such expectations."

Institutional View

1. Fitch: Raising global economic growth expectations. The U.S. economy slowed down on Tuesday, Fitch raised its global GDP growth expectations, while pointing out a slowdown in the U.S. economy and job market. However, global economic growth is expected to slow down “significantly” this year qgrse.cnpared to last year’s data. Global economic growth rate is expected to drop to 2.4% this year from 2.9% last year and is expected to slow further to 2.3% next year and will grow by 2.6% by 2027. In addition, Fitch said uncertainty in U.S. tariff policy has declined after a series of statements. However, chief economist Brian Coulton noted: "A clearer perception of U.S. tariff hikes do not change the fact that tariffs remain huge and will weaken global growth. Signs of a slowdown in the U.S. economy are now in hard data, not just sentiment surveys." Fitch noted that the rise in inflation caused by the tariff increase was "moderate" but is expected to accelerate later this year. “Higher inflation will curb real wage growth,It also puts pressure on US consumer spending, which has slowed significantly in 2025. "At the same time, U.S. job growth has slowed down "significantly", and weaker job markets should convince the Fed to cut interest rates faster than previously expected. Fitch currently expects the Fed to cut interest rates by 25 basis points at its September and December meetings and will cut interest rates three more next year.

2. Market Analysis: The UK's political situation is crucial to the pound

Ebury strategist Matthew Ryan said in a report that British politics is more likely to determine the performance of the pound than upcoming economic data, amid concerns about fiscal sustainability. "At present, we attach more importance to UK political development than macroeconomic development." "He said that the cabinet reshuffle of British Prime Minister Stamer did not have much impact on the pound, mainly because the Chancellor of the Treasury Reeves retained his position as Treasury Secretary. However, he said investors are unlikely to remain calm until the fall budget was announced on November 26, and tax increases are almost certain.

3. Wells Fargo: The Fed is expected to cut interest rates five times by mid-2026

French Bank of China expects the Federal Reserve to cut interest rates five times before mid-2026, at 25 basis points. The bank expects to cut interest rates in three consecutive meetings, lowering interest rates to 3.50%-3.75% by the end of the year, and then cut interest rates twice in March and June 2026, reducing the interest rate range to 3.00%-3.25%. This prospect reflects the weak labor market, with average jobs rising by only 29,000 in August, losing The industry rate rose to 4.3%. Inflation is still a challenge, with core PCE growing by 2.9% year-on-year, but Wells Fargo pointed out that inflation expectations remain stable. The bank will increase the possibility of a U.S. economic recession next year to 35%, but it is expected that economic growth will be stronger in the next few years. It is expected that with fiscal stimulus and interest rate cut measures to take effect, the GDP growth rate in 2026 will reach 2.4%.

The above content is all about "[XM Foreign Exchange Platform]: The US dollar index is blocked below the resistance level, and the market is waiting for the U.S. CPI data". It was carefully qgrse.cnpiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for your support!

Due to the author's limited ability and time tightness, some of the content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: