In March, core inflation in the United States remained high and persistent, while headline inflation experienced a significant drop of nearly 1 percent, resulting in a mixed inflation picture.
In terms of employment costs, both benefits and wages increased by 1.2% in March, compared to 0.8% and 1% respectively in February.
Based on the data available, it indicates that the Federal Reserve is likely to implement another 25-basis points interest rate hike at their upcoming meeting next Wednesday,3rd May.
Despite the persistent presence of inflation in the US, recent data reveals a slowdown in economic growth during the first quarter of 2023. The initial assessment of US growth showed a modest expansion of only 1.1% in Q1, falling short of market expectations of 2% and less than half the 2.6% growth observed in Q4 2022.
Following the release of the data, the US dollar experienced a slight increase in value and is currently trading around the 101.60 level, which marks its highest level for the week.
From a technical standpoint, the breach above the 20-day simple moving average suggests that the US dollar may continue to rise, although it might encounter resistance around the 101.80-102.00 range, making it challenging to convincingly break through before the weekend.
US DOLLAR INDEX DAILY PRICE CHART – APRIL 28, 2023
