The Dollar is Moving Towards The Peak of The Year Before The Inflation Data

The US dollar settled at a level slightly less than this year’s peak against the euro and touched a five-week peak against the yen before US inflation data, with a high inflation rate likely to pressure the Federal Reserve to reduce stimulus policies.

The dollar received a boost from strong US jobs data last week and statements by Fed officials about reducing bond purchases and eventually raising interest rates earlier than elsewhere.

Six sessions of gains against the euro sent the single currency to its lowest level since late March on Tuesday. The euro scored about 1.1718 dollars in the Asian session and is close to the lowest level for this year at 1.1704 dollars.

The dollar index recorded 92.193, its highest level in 3 weeks, approaching the 2021 peak at 93.439.

Inflation data may determine whether the dollar will test these high levels and a strong reading is likely to fuel interest rate hike speculation and provide support, while a surprisingly low reading dampens these expectations.

The Japanese currency extended its losses for five consecutive sessions and fell slightly to 110.69 yen against the dollar in early trading, its lowest level since July.

The dollar also touched a two-week high against the British pound at $1.3820, and a one-month high of 0.9234 Swiss francs.