US Dollar Index (DXY) trims losses ahead of US inflation data

The US Dollar (USD) experienced slight gains on Tuesday, as Federal Reserve (Fed) Governor Christopher Waller's hawkish remarks encouraged investors to focus on the upcoming Consumer Price Index (CPI) release scheduled for October. The USD Index (DXY), which gauges the value of the US Dollar against a basket of six major currencies, saw a positive turn in the daily chart, reaching a session high of 101.77, although it remains cautious following a 0.6% decline on Monday.

Waller's comments provided a fresh boost to the US Dollar in a relatively stable market, hinting at a potential 50 basis-point rate hike in December if consumer inflation remains high. However, the October CPI data, which is due in an hour, will not include the key year-on-year reading due to a government shutdown last year. Nonetheless, monthly inflation is expected to ease in October.

Analysts at Danske Bank anticipate a decrease in both headline and core inflation compared to September, with headline CPI at +0.65% and core at +0.20% for October. Meanwhile, the US Dollar is currently struggling as the significant drop in oil prices has attracted investors to riskier currencies such as the New Zealand Dollar (NZD), Australian Dollar (AUD), Euro, and British Pound (GBP).

The market's focus now lies on the release of the crucial US CPI report, which could provide further support for the commodity amid mixed signals regarding US-Iran diplomatic talks.