Dollar Dips as US Inflation Meets Expectations

2026-06-10 12:51 By Joana Ferreira 1 min. read

The dollar index fell slightly to 99.8 on Wednesday after US inflation data largely aligned with expectations, with only a minor downside surprise in core month-on-month figures.

The headline inflation rate rose to 4.2% in May, its highest since April 2023, driven by surging energy costs amid the Iran conflict.

The core rate also climbed to 2.9% year-over-year, the highest since September 2025.

Month-over-month, CPI increased 0.5% as expected, while core inflation eased more than anticipated to 0.2%.

Traders modestly reduced bets on Federal Reserve rate hikes this year, though a quarter-point increase in December remains fully priced in.

Meanwhile, Middle East tensions stayed elevated, with the US and Iran exchanging fresh strikes.

President Donald Trump warned that Iran is taking "too long" to negotiate a peace deal and will now "pay the price," raising doubts about the durability of a fragile ceasefire and the prospects for a long-term agreement.



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Dollar Dips as US Inflation Meets Expectations
The dollar index fell slightly to 99.8 on Wednesday after US inflation data largely aligned with expectations, with only a minor downside surprise in core month-on-month figures. The headline inflation rate rose to 4.2% in May, its highest since April 2023, driven by surging energy costs amid the Iran conflict. The core rate also climbed to 2.9% year-over-year, the highest since September 2025. Month-over-month, CPI increased 0.5% as expected, while core inflation eased more than anticipated to 0.2%. Traders modestly reduced bets on Federal Reserve rate hikes this year, though a quarter-point increase in December remains fully priced in. Meanwhile, Middle East tensions stayed elevated, with the US and Iran exchanging fresh strikes. President Donald Trump warned that Iran is taking "too long" to negotiate a peace deal and will now "pay the price," raising doubts about the durability of a fragile ceasefire and the prospects for a long-term agreement.
2026-06-10
Dollar Hold Firm on Middle East Tensions
The dollar index hovered around 100 on Wednesday after staging a sharp intraday rebound in the previous session, as renewed hostilities in the Middle East cast doubt on a fragile ceasefire and the prospects for a longer-term peace agreement. The US launched “self-defense strikes” against Iran in response to the downing of an American helicopter, while Iranian Foreign Minister Abbas Araghchi warned that Iran’s armed forces would leave no attack or threat unanswered. Higher energy prices driven by the regional conflict fueled concerns about inflation and the possibility of central bank rate hikes. Investors also awaited the latest US inflation data for fresh signals on the Federal Reserve’s policy outlook, after stronger-than-expected jobs figures last week reinforced expectations of an interest rate increase before the end of the year. Elsewhere, the ECB and the BOJ are widely expected to raise interest rates later this month.
2026-06-10
Dollar Eases as Iran and Israel Halt Strikes
The dollar index slipped below 100 on Tuesday, pulling back from a nine-week high after Iran and Israel agreed to halt attacks against each other, easing safe-haven demand for the greenback. President Donald Trump also said both sides were seeking an immediate ceasefire and that final negotiations were moving forward. Despite the decline, the dollar remained near multi-month highs against its major peers as stronger-than-expected US jobs data reinforced expectations of a Federal Reserve interest rate hike by year-end. Markets are now pricing in roughly a 70% chance of a quarter-point rate increase in December. Investors are also awaiting US CPI and PPI data later this week for further clues on the Fed’s policy outlook. Meanwhile, the European Central Bank is widely expected to raise interest rates this week.
2026-06-09