DXY: Dollar Index Closes Eighth Straight Winning Week. How Long Can the Rally Last?

The powerful upward swing has taken bears by surprise. Could upcoming inflation data knock the dollar later this week?

• The US dollar index DXY notched an eighth consecutive week of gains, underpinned by a robust US economy, while rival economies wobble and wiggle. The index, measuring the dollar’s value against six other currencies, pierced the 105.00 mark on Friday. It’s up a whopping 5% in the past two months.
• The summer of 2023 will go down as a period of much pain for dollar bears. Calling for the dollar’s demise since late April, they have been battered hard as the king of forex trading has turned sharply higher. The US currency has inflicted losses to every one of the major rivaling currencies in the past quarter.
• How long can that humiliation last? Inflation data out of the US this week is expected to show price pressures climbed slightly to 3.6% in August from 3.2% in July. Rising inflation could be a hot sign that the Fed may decide to bump rates later this month. All of that could further fuel the dollar. Lowering inflation, theory suggests, could take the edge off the buck.