XE Market Analysis: Europe – May 18, 2021

The dollar has tracked lower, which shouldn’t be too surprising given the prevailing buy-in of the Fed’s transitory narrative on inflation alongside the fact that the U.S. inflation rate is markedly higher versus peers, which imparts (all else equal) a weakening dynamic on the nominal value of the greenback. The DXY USD index breached the trend lows that were seen before the release of the U.S. CPI data last week, pegging a three-month low at 89.94. EUR-USD concurrently posted a three-month peak at 1.2197, and USD-JPY ebbed under 109.00 for the first time since last Wednesday.