DXY: US Dollar Bounces Off 4-Year Lows as Forex Traders Eye June’s Inflation Data

Consumer prices are expected to have picked up the pace to a 2.6% clip last month, potentially complicating the Fed’s decisions on interest rates.

🤫 Lows in the Rearview

• The US dollar index DXY was treading water Tuesday morning, floating around 98.00. More importantly, it was busy clawing back ground after sliding to a four-year low of 96.30 earlier this month.
• Traders are reassessing the buck’s short-term fate as fresh macro data looms large. FX market bros are bracing to see if the dollar’s upside still has room to move (because the rivals are out and about, ready to hunt for pips).
• The greenback was seen towering over the forex board: The EUR/USD plunged under $1.17, well off its multi-year peak of $1.1830 hit just two weeks ago. The GBP/USD slipped toward $1.34, a steep drop from its four-year high of $1.38. Meanwhile, the USD/JPY is chasing 148.00, extending the yen’s recent weakness.

👀 All Eyes on Today’s US CPI

• Traders are now zeroed in on June’s US inflation report USCPI, due later today. Forecasts suggest consumer prices picked up the pace to a 2.6% annual clip, up from 2.4% in May — a sign sticky price pressures might linger longer.
• A hotter-than-expected print could make it harder for the Federal Reserve to stick to its easing roadmap. Policymakers have repeatedly stressed they need more confidence that price growth is moving sustainably toward target (much to the dislike of stock traders and rate-cut advocate Trump).
• Current market pricing shows the expectation is for the Fed to skip a rate cut in July, pushing the next move to September, but that bet could wobble if the looming CPI surprises to the upside.

🗽 Can the Greenback Hold?

• The recent surge in dollar demand is also about positioning — the index’s dive below 97.00 last week had left traders heavily short the buck, primed for a squeeze when sentiment shifted.
• Global macro risks, including Trump’s fresh tariff salvos and mixed global growth signals, are also keeping safe-haven dollar flows alive — while pressuring demand for other currency alternatives.
• If inflation runs hot and the Fed stays put, the greenback could hold its floor above the 97.00–98.00 zone. But any dovish surprises or weak data this month could reopen the floodgates for a fresh dollar dip.