The US Dollar Index (DXY) is now trading at the highest levels since 2002. This week, the US April CPI data is released on Wednesday. Barring a much weaker than expected inflation figure, the DXY should grind higher, economists at ING report.

We should see slightly softer US inflation

“Lower gasoline and used car prices should knock headline and core CPI off its highs. Any larger than expected falls can perhaps suggest that the Fed need not be as aggressive in its hiking plans.”

“Barring a much weaker than expected US inflation figure on Wednesday, we should expect DXY to grind higher still.”

“There are plenty of Fed speakers this week too. But some softening of the Fed tightening profile looks wishful thinking at this stage and it looks dangerous to position against further dollar strength.”