• US inflation, as measured by the PCE Price Index, remained unchanged at 2.5% YoY in July.
• The USD is gaining due to the strength of its economy while inflation is coming down
• The labor market is still the focus for September's decision

On Friday, the US Dollar, measured by the US Dollar Index (DXY), extended gains after the release of July's Personal Consumption Expenditures (PCE) Index, which showed inflation continuing to be kept at bay.

With inflation coming down and economic activity steady, the outlook justifies rate cuts by the Federal Reserve (Fed), whose chairman has already stated that there will be a cut in September. However, the PCE print may not have been dovish enough to persuade the central bank to start with a 50-basis-point cut.