The dollar index remained stable around 106.1 on Tuesday, after two consecutive days of gains, as investors awaited key inflation data later this week that could influence Federal Reserve policy expectations.
Dollar strengthens ahead of inflation data
On Monday, data showed that U.S. inflation expectations for the next year rose to 3% in November, up from 2.9% in October, indicating ongoing concerns about persistent price pressures. Additionally, last week's data revealed stronger-than-expected job growth in November, though the unemployment rate edged up to 4.2%. Despite these mixed signals, markets are pricing in an 86% chance of a 25-basis point rate cut by the Fed this month, although the outlook for 2025 remains uncertain.
Eyes on the Fed
Investors are also closely watching monetary policy decisions from central banks in Australia, Canada, and Switzerland this week, which could further add to market volatility.
