The US CPI expects to support interest rate cuts, but the US dollar has risen for three consecutive times?

XM Foreign Exchange APP News--The US dollar index continued its rebound during the European period on Thursday (September 11), and has rebounded for three consecutive days. It is currently up 0.15%, trading around 97.97. The United States will release CPI data in the evening. The market expects this inflation data to rebound slightly, which will support the Federal Reserve's interest rate cut to weaken US CPI expectations: overall inflation is 2.9% year-on-year, and core inflation is 3.1% year-on-year. If the CPI report unexpectedly falls this week, the Federal Reserve's 50 basis point interest rate cut is expected to be officially included in the scope of consideration. The dollar bulls may accelerate the closing of positions to make the US dollar index break down quickly. What are the market expectations for the US CPI report? Traders and economists generally predict that the overall CPI will record 2.9% year-on-year, and the core CPI excluding food and energy prices is expected to be 3.1% year-on-year. If both data meet expectations, inflation will rebound slightly from last month, supporting the Fed's interest rate cut. The particularity of the misaligned calendar of the US CPI data rhythm and policy environment is an easily overlooked dimension in market volatility, and this month's economic data is a typical manifestation of this feature. The Federal Reserve meeting adopts a half-quarter convening mechanism (about once every 6-7 weeks), and its timing is often difficult to match the monthly release pace of most core economic data. Specifically, another dimension of the Fed's dual mission this month: the US PPI report released on Wednesday was also significantly lower than expected (although it is still basically the same as the recent reading since the second quarter). At present, the employment market and producer prices weakened simultaneously after the end of the silent period. If the CPI report this month continues the cooling trend of PPI and shows lower than expected price pressure, it will beThe Fed introduced a double rate cut of 50 basis points to create room. US inflation trend: The decline toward the 2% target has stagnated, and the core CPI has shown a rebound trend. From the overall trend, the process of US consumer inflation falling toward the 2% target of the Federal Reserve has stagnated for more than a year, and the overall CPI has always hovered in the 2.3%-3.0% year-on-year period. At the same time, excluding the volatile food and energy prices and the core CPI, which better reflects the potential price trend, has shown a rebound in recent months after hitting a year-on-year low of 2.8% earlier this year. The Fed's policy dilemma: The balance between inflation targets and weak employment This situation puts the Fed in a policy dilemma before next week's meeting: on the one hand, inflation continues to be higher than the target level, which may limit its room for more aggressive interest rate cuts; on the other hand, from the perspective of the employment market in its dual mission, aggressive interest rate cuts are necessary. Judging from the potential market reaction, if the CPI report unexpectedly falls this week, this policy contradiction may be alleviated and 50 basis points rate cuts are officially taken into consideration - as of the time of writing, the market's probability of pricing this scenario is only 10%. As most senior traders know, from a technical perspective, the core inflation reference indicator when the Federal Reserve formulates policies is the core personal consumption expenditure price index (CorePCE), but for the trading side, CPI reports are at least not less important than the former - the key reason is that the release time of CPI is several weeks ahead of CorePCE, which is more guiding for short-term trading decisions. As we have pointed out before, CPI has generally declined since the beginning of this year, but has always been stubbornly higher than the Fed's 2% policy target. As can be seen from the above chart, the "price" sub-index in the Purchasing Managers Index (PMI) has seen a significant increase in the past few months, and this trend even predates the Trump administration's formal announcement (and later suspended) tariff policies. Despite signs of slowing economic growth, stofoco.companies are forced to bear higher costs for goods and services amid the continued uncertainty of trade policy, a factor that may put upward pressure on CPI in the stofoco.coming months. The US dollar index is in a rebound trend after a decline. The index breaks down the box and rebounds back into the box. It is currently suppressed by the short-term moving average. The key pressure level is the 98 integer mark and 98.30 above it. 97.70 is the key support price, which is the bottom of the box. The US dollar index breaks down the box and then rises back. This price is difficult to fall below in the short term. If it falls below, it will be considered that the rebound of the US dollar index will end and continue to develop downward. The trend of the US dollar index means that the market has fully priced the expectation of the US central bank's 25 basis points of interest rate cut, that is, if nothing unexpected happens, the US dollar index has temporarily bid farewell to the panic of interest rate cuts. However, at the same time, the US dollar short sellers may also prepare bullets for the Fed to cut interest rates beyond expectations. The recent rebound may also be that the US dollar short sellers are accumulating their efforts to prepare chips. The rebound of the US dollar has given the short sellers a good position to build positions. (Daily chart of the US dollar index, source: Yihuitong) 18:00 Beijing time, the US dollar index is now at 97.96.

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