USD Gains on Consumer Sentiment Beat, Inflation Expectations Ease

The US dollar strengthened marginally following the University of Michigan's consumer sentiment index climbing to 55.0 in October, surpassing both the preliminary reading of 54.2 and September's 55.1. Current conditions improved to 61.0 from expectations of 60.0, while future expectations came in at 51.2, below the anticipated 51.7. Crucially for USD bulls, one-year inflation expectations declined to 4.6% from 4.7%, while five-year expectations held steady at 3.7%. The data suggests consumer resilience despite ongoing economic uncertainties, with improvements in personal finances and business outlook offsetting broader concerns. Technical traders are watching key resistance levels on major USD pairs, particularly as the dollar index approaches recent highs. The combination of better sentiment and easing inflation expectations could support the Federal Reserve's current stance, potentially limiting aggressive rate cut expectations and providing near-term dollar support.