• The DXY is consolidating below 104.00 as investors demand the release of US inflation for further guidance.
• The Fed needs a compelling drop in inflation to shift to a less aggressive stance.
• Uncertainty could elevate further if the inflation figures shoot above 8.5%.

The US dollar index (DXY) is balancing below the round level mark of 104.00 as anxiety over the release of the US inflation has sidelined the market participants. The asset has been oscillating in a range of 102.35-104.20 from April 28 amid the spree of major economic events right from the interest rate decision by the Federal Reserve (Fed) and release of the US Nonfarm Payrolls (NFP) last week to the upcoming Consumer Price Index (CPI) numbers.

US CPI numbers

The US Bureau of Labor Statistics is expected to print the yearly inflation at 8.1% lower than the former figure of 8.5% while the core CPI that excludes food and energy is likely to land at 6%. Although inflation print is seen lower, that doesn’t guarantee a trim to the odds of one more jumbo rate hike by the Fed in June.  Investors should brace for higher volatility if the yearly inflation shoots above the multi-decade high print of 8.5%.

Fed’s Mester speech

Cleveland Fed President Loretta Mester dictated that the Fed won’t soften its stance towards the interest rates till it finds a compelling slippage in the inflation numbers. Inflation numbers are on the rooftop and the current situation is demanding to firmer tackle to slow down the pace of soaring inflation.

Key events this week: Consumer Price Index (CPI), Initial Jobless Claims, Producers Price Index (PPI) Michigan Consumer Sentiment Index (CSI).

Eminent issues on the back boiler: Russia-Ukraine Peace Talks, China’s CPI, and European Central Bank (ECB) President Christine Lagarde’s speech.,