US Dollar (USD) gathered strength after US inflation data surprised to the upside. Economists at Commerzbank analyze Greenback’s outlook.
Playing the role of admonisher rather than joining in the jubilant optimism of the USD bulls
Will the USD strength we have seen since Tuesday’s data release be permanent and perhaps need to be extended? That depends on how the Fed responds. I would like to point this out: Before the Fed’s next FOMC meeting (on March 20), we still have the January PCE deflator numbers, i.e. the Fed’s actual target measure, as well as another round of CPI data (the February one, on March 12). So nothing is decided yet.
Our economists point out that January inflation figures have to be treated with caution. Therefore, I have to point out to you that the current strength of the USD should also be treated with caution. At the moment, I prefer to play the role of admonisher rather than join in the jubilant optimism of the USD bulls. Are these in your environment also the people for whom EUR/USD forecasts could not be high enough not long ago?
Source: https://www.fxstreet.com/news/the-current-strength-of-the-us-dollar-should-be-treated-with-caution-commerzbank-202402141432