In June, non-core annual inflation in the USA was at 2.7%, impacting the dollar’s performance and decreasing the likelihood of a Fed cut in September. Inflation rose due to food, transport, and used vehicles, challenging the idea of a sustainable return to 2%. The Fed considers inflation, tariffs, and geopolitical risks in upcoming decisions.

The probability of the Fed holding in September has increased, with a 97% chance of maintaining rates on July 30. Expectations for cuts have shifted, leading to a cautious approach by the Fed. The dollar’s performance depends on trade tensions and confidence in government policies on tariffs.

American tariffs on the EU caused concern for the bloc’s economy, with a potential impact on the euro-dollar exchange rate. Rising American inflation to 2.7% in June may lead to further cuts by the ECB and Fed. The timing of these cuts remains uncertain, affecting currency movements.

The euro-dollar pair has retreated from recent highs, with $1.16 being a key level to watch. A move back to $1.166 is possible in the short term. The pair’s movement depends on reactions to upcoming news and the ECB’s meeting on July 24. The current trend suggests a small retracement in an uptrend.

USDJPY strengthened after higher American inflation, influenced by disappointing trade data from Japan and concerns of a technical recession. A potential BoJ rate hike on July 31 could impact the pair’s movement. Key levels to watch include ¥149 and ¥148, signaling potential upward momentum.

Short-term support for USDJPY is unclear, with ¥147 being a possibility. Breaking above ¥148 could lead to further gains, depending on buying volume. Major news on tariffs or monetary policy shifts could impact the pair’s movement. Personal opinions, not trading recommendations, are shared in this analysis by Michael Stark of Exness.

Read more at Yahoo Finance: Strength for the Dollar After Higher Inflation