FX.co ★ Dollar Stabilizes Ahead of Key Inflation Data

The dollar index stabilized close to 99 on Tuesday following a period of pressure, as investors anticipated the upcoming consumer inflation report to gain insights into the Federal Reserve’s policy direction. Markets are currently predicting the Fed will implement two rate cuts this year starting in June. However, any unexpected rise in inflation might restrict the central bank's ability to ease monetary policy. In December, job growth figures fell short of expectations, as indicated by last week’s nonfarm payrolls report, which supports a more dovish outlook for Fed policy. Investors are also keeping an eye on an impending US Supreme Court decision regarding the legality of President Donald Trump’s tariff policies, expected on Wednesday. Additionally, the dollar's value weakened on Monday after federal prosecutors indicated potential legal action against Fed Chair Jerome Powell concerning his testimony to Congress about a building renovation project. This development has intensified concerns regarding the central bank's independence.