US dollar gives up five-week high as traders assess inflation data
The US dollar fell in European trade on Tuesday away from a five-week high on profit-taking as traders assess the latest inflation data.
The data showed prices remain subdued despite Donald Trump’s tariffs, and bolstered the case for multiple Fed rate cuts this year.
The Index
The dollar index fell 0.25% today to 101.47, with a session-high at 101.76.
On Monday, the index rose 1.35%, marking the biggest profit in 2025, with a five-week high at 101.98.
The gains came after the announcement of the US-China preliminary trade deal this week.
US Rates
Fed official Adriana Kugler said that Trump’s trade policies will likely raise inflation and impact growth negatively, despite the latest tariff pause.
Cleveland Fed President Beth Hammock said the Fed requires more time to assess the impact of Trump’s tariffs before deciding on the suitable response.
According to the Fedwatch tool, the odds of a 0.25% Fed rate cut in June stand at just 12%.
The odds of 0.25% Fed rate cut in July stood at 40%.
Traders now wait for major April inflation data for the US to gather more clues.
US Inflation
US consumer prices rose 2.3% y/y in April, down from 2.4% in March, and below estimates of 2.4%.
US core prices, excluding food and energy, rose 2.8% in April, same as March and matching estimates.
US interest rate futures rose after the inflation data, with increasing bets on future Fed interest rate cuts.
Gold stabilizes before US inflation data
Gold prices rose in European trade on Tuesday, holding above two-week lows near $3200 as the dollar stalled against major rivals.
It comes ahead of important US inflation data, which will showcase the impact of US tariffs on consumer prices and could impact the future path of Fed interest rates.
Prices
Gold prices rose 0.9% today to $3265 an ounce, with a session-low at $3216.
On Monday, gold lost 2.7%, the third loss in four days away from a two-week trough at $3207.
The loss came as haven demand tumbled and the dollar rallied following the US-China trade deal.
US Dollar
The dollar index fell 0.25% on Tuesday away from a five-week high at 101.98 against a basket of major rivals.
The dollar lost ground as traders shunned new positions before crucial US inflation data for April.
US Rates
Fed official Adriana Kugler said that Trump’s trade policies will likely raise inflation and impact growth negatively, despite the latest tariff pause.
Cleveland Fed President Beth Hammock said the Fed requires more time to assess the impact of Trump’s tariffs before deciding on the suitable response.
According to the Fedwatch tool, the odds of a 0.25% Fed rate cut in June stand at just 12%.
The odds of 0.25% Fed rate cut in July stood at 40%.
Traders now wait for major April inflation data for the US to gather more clues.
US consumer prices are expected up 2.4% y/y in April, same as before, while core prices are expected up 2.8%.
SPDR
Gold holdings at the SPDR Gold Trust rose 1.15 tons yesterday to a total of 939.09 tons.
