Hawkish Fed Repricing Propels USD Higher

Strong US economic data and hawkish Fed expectations are driving the dollar higher, with the DXY targeting 100. EUR/USD faces technical pressure near 1.160 as interest rate differentials favor the USD.

Key Takeaways

• 1.The US Dollar is gaining momentum driven by hot US data (PPI, import prices) and a hawkish repricing of Fed rate hike expectations.
• 2.EUR/USD has broken below 1.170, with short-term rate differentials widening back to pre-war levels, potentially leading to a test of 1.160.
• 3.Central banks in Poland (NBP) and Czech Republic (CNB) are currently resisting hawkish market pricing, though inflation risks persist in the region.

Table of Contents

• USD: Major break higher
• EUR: Support from rate differentials has evaporated
• PLN: NBP resists hawkish pricing but risk of hikes grows
• CZK: CNB sending dovish vibes
• Author
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