USDInd continues to rise ahead of US CPI

• Strong payrolls data boosted USDInd performance
   
• 80.1% chance of 25bps cut in November
   
• CPI report may change the rate cut dynamics
   
• Higher inflation could lift USDInd towards 100-period SMA

The US Dollar Index, which measures the strength of the greenback against a basket of six major currencies including the Japanese Yen (USDJPY) and the Swiss Franc (CHF), is trading close to a two-month high.

The USDInd's recent strong performance comes as markets trimmed bets on Fed rate cuts this year following stronger payrolls data.

US Non-Farm Payrolls last Friday, 4th October: 140K - Expected vs. 254K - Actual.

At the time of writing (source: CME Fed Watch Tool), markets are pricing in an 80.1% probability of a 25bps cut in November and a 19.9% probability of no change.

Today, investors will be watching the CPI report closely for signs of a cooling inflationary trend. Economists are expecting a 0.1% monthly increase and a 2.3% rise over the past 12 months.
 

This report may influence the FED's policy decision at its November meeting.

Initial jobless claims (due today) may also contribute to higher volatility.

Higher than expected inflation could push the Dollar Index higher towards its 100-period simple moving average.

On the other hand, a lower-than-expected reading could drag the USDInd down towards the 102.5 level.