US Dollar: Range-bound gains as CPI runs hot – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes that the US Dollar (USD) is firmer as confidence in a swift reopening of the Strait of Hormuz fades, with USD outperforming most major currencies. Haddad expects US April Consumer Price Index (CPI) to print hotter on gasoline and rent effects, but highlights trimmed-mean measures near 2%. They see the Dollar Index DXY remaining anchored within its 96.00–100.00 range over coming months.

Dollar gains seen within broad range

"USD can extend recent gains in the near-term. Stabilizing US labor demand and anchored long-term inflation expectations tilt the macro narrative back toward Goldilocks rather than stagflation. Overall, we expect the dollar index (DXY) to remain anchored within its nearly one year 96.00-100.00 range in the next few months."

"US April CPI takes the data spotlight today (1:30pm London, 8:30am New York). Headline and core inflation are expected to quicken to 3.7% y/y (vs. 3.3% in March) and 2.7% y/y (vs. 2.6% in March), respectively. Higher gasoline prices and a one-off statistical upside boost to owners’ equivalent rent (26% of CPI basket) to correct for shutdown-related missing data from October 2025 are seen keeping inflation hot in April."

"As such, CPI less food, shelter & energy and the Cleveland Fed 16% trimmed-mean CPI will provide a cleaner read on the underlying US inflation backdrop. Both measures are running close to the Fed’s 2% target."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)