US inflation expectations remained pressured on Wednesday as yields retreated ahead of Thursday’s key Consumer Price Index (CPI) data for September.

That said, the inflation precursors, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, retreated from the recent one-week highs of 2.31% and 2.36% respectively to 2.32% and 2.29% in that order.

It should be noted, however, that the inflation expectations remain well beyond the multi-month low marked during late September, which in turn justifies the latest hawkish Fedspeak and the Federal Open Market Committee (FOMC) Meeting Minutes.

Even so, a retreat in the US inflation expectations and yields challenge the US Dollar Index (DXY) which extends the previous day’s pullback from the two-week top to 113.17 by the press time.

Also read: US Dollar Index struggles to justify hawkish Fedspeak, FOMC Minutes ahead of US CPI