Forex Forecast: Sticky US Inflation Keeps Dollar Bid Alive

The upward revision to Social Security's cost-of-living adjustment isn't just a retiree issue — it's a proxy for inflation persistence that forex desks are pricing into rate-differential models. When COLA estimates rise, it typically reflects CPI components staying elevated longer than markets hoped, delaying the timeline for Fed easing.

For the forex forecast community, this matters because rate-cut delays widen yield spreads in the dollar's favor against the euro, yen, and Swiss franc. Positioning data already shows funds trimming short-dollar bets as inflation stickiness gets repriced into forward curves.

Until COLA-linked inflation metrics show a genuine deceleration, expect the forex forecast bias to lean dollar-supportive, particularly against funding currencies with dovish central banks.