Last week the United States released its annual inflation data as seen from the annual Consumer Price Index (CPI) data. This data has continued to decline every month since August 2022 from its highest inflation at 9.1% until this January it reached 6.5%. This decline was the result of the Fed’s interest rate hike since March 2022 starting to raise 25 Bps, then the next 50 Bps and then getting more aggressive by 75 Bps until it finally started to relax again in December 2022 raising its interest rate to only 50 Bps.
The expected US inflation target is 2.0%. However, due to inflation which has been successfully suppressed since August 2022 until now, the US Dollar, which has previously continued to strengthen since the policy of increasing interest rates was increasingly aggressive, is currently showing a weakening and this weakening may continue, especially with the prediction that a rate hike will interest rates can be 25 Bps even in the middle of 2023 it is predicted that the Fed’s interest rate can even be stopped from increasing and will instead cut interest rates again.
The continuing decline in inflation and the prediction that there will be another interest rate cut in the middle of 2023 has made the dollar index predicted to fall towards the level of 98.77-100.36 with the possibility of an upward correction to the level of 102.35-102.92 in the past few weeks.
