On Monday's trading, The US Dollar only hovered around a five-week high against its major peers. This proves that the dollar price already has a vital area. But the FED is still unsure as the inflation data remains a concern for the dollar.

"The Dollar has been well supported since the released US jobs data came out stronger than expected earlier this month. The Fed also commented that they had leaned more to the hawkish side, but of course, the focus is tomorrow's CPI," said a senior FX Strategist.

The FX strategist from Barclays also said that he believes that the market is more worried about the upside risks to inflation than the downside risks. So following the CPI data released last week, the data set showed consumer prices rose compared to falling as estimated.

Meanwhile, the dollar index measures at a greenback against many major currencies. And this proves how outlook inflation can happen at any time. Furthermore, a University of Michigan survey showed an inflation rate of 4.2% in January.

Small Rate Hikes Likely to Happen and Federal Reserve Chief Expects Significant Reduction in Inflation

Philadelphia Federal Reserve President, Patrick Harket, said that the surprisingly strong jobs data reported last week did not alter his view that moving to small interest rates is a good strategy for the central bank. He even said that the rate would be cut in 2024.

"What is driving the rate increase now is inflation, and we are starting to see signs. And early signs that inflation is starting to move down are what we see," said Harker in a Reuters interview.

"At this point, we can go at a pace of 25 basis point rate hikes. And it could just get inflation under control without undue damage to the labour market," he said in explaining that moving to smaller rate rises is a risk management issue for the Fed.

That increase in borrowing costs was followed just a copy days later by an employment report. It shows the US has a gain of 517 thousand jobs in January, which is three times higher than analysts predicted. And Fed officials expect that rate increases will help supply and demand.

Meanwhile, Fed chair Jerome Powell noted that if we continue to get robust labour market reports or higher inflation reports, it may well be the case that we have to do more. 

Economists then linked this to the point of the central bank's interest rate increase. What is happening now is that the Federal Reserve Chief is still quite confident that there will be a reduction in terms of inflation.

It was stated that the annual inflation rate was 6.5 per cent, which was already higher than the central bank's expectations, so the ongoing streak would soon stop.

Investors Predict that Higher Inflation Will Happen, and JPMorgan Says that the US Economy is on the Verge of Recession

If there is a claim from the central bank that inflation will drop significantly, this is precisely what investors are worried about. They believe that higher inflation will occur. And this is related to bond yields in the mixed zone, which are still roughed.

This is exacerbated by the claims of JP Morgan Asset Management Chief Strategist, who now says that the economy will be on the brink of a downturn, especially in the next two years. US inflation will subside again in 2024, maybe back in the 2% area.

Contrary claims from the US Central Bank with investors make global markets more uncertain. Everyone hopes for economic clarity, but what appears now is no clarity. So that the dollar until today is still hanging in the five week high area vs significant currencies.