US Dollar Index Stays Near 99.40 as Traders Await US PCE Inflation Data

US Dollar Index Holds Near 99.40, Focus Turns to PCE Inflation Data

The US Dollar Index (DXY) is trading slightly higher near 99.40 during the Asian session on Friday, as investors maintain a cautious stance ahead of the release of the US PCE Price Index—a key measure of inflation watched closely by the Federal Reserve.

Limited Upside Despite Safe-Haven Demand

The Greenback is benefiting modestly from safe-haven inflows amid global market uncertainties, including ongoing tariff discussions and mixed US data. However, the DXY remains on track for a fifth consecutive monthly decline, signaling broader weakness stemming from fiscal and trade policy ambiguity.

Jobless Claims Add Pressure on USD

US economic data released Thursday added to the pressure. The Department of Labor (DOL) reported that Initial Jobless Claims rose to 240,000 for the week ending May 24, up from a revised 227,000 the previous week and above the 230,000 consensus estimate. Continuing Claims also increased to 1.919 million, suggesting a softening labor market.

Trump Administration Considers Temporary Tariffs

Late Thursday, the Wall Street Journal (WSJ) reported that President Donald Trump’s administration is reviewing a statute that could allow temporary tariffs of up to 15% for 150 days. While no official decision has been made, this uncertainty is seen as a potential headwind for the USD in the near term.

“The administration hasn't come to a decision and could hold back from acting on any plans,” WSJ reported.

Key Market Focus: US PCE Inflation

Market participants are now turning their attention to the upcoming release of the US PCE Price Index. A stronger-than-expected print could reignite expectations of delayed Fed rate cuts, providing a boost to the USD. Conversely, a softer figure may deepen bearish sentiment around the Greenback.