ING’s Chris Turner notes that the Dollar stays well supported as markets focus on solid US growth, above-target inflation and expectations for further Federal Reserve tightening. A potentially strong US September CPI is seen keeping rate expectations elevated. Turner highlights DXY consolidation above 102 as bullish and prefers a move towards 102.85 this week, with geopolitics offering additional support.

DXY consolidation points to further upside

“Instead, FX markets are preferring to concentrate on the cyclical story of decent US growth, above-target inflation and the prospect of the Federal Reserve hiking 75bp from current levels.”

“Barring a big fall in energy prices this week, which seems unlikely, Wednesday’s release of September US CPI inflation looks set to keep those Fed tightening expectations broadly intact.”

“With US bond markets closed for the Columbus Day public holiday, it should be a quiet day for FX markets.”

“But DXY consolidation above 102 looks bullish, and our preference would be for a push up to 102.85 this week.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)