DXY Rally Stalls After CPI; May Seasonality Keeps 99 in Play

• EUR/USD rebounded from two‑week lows, reclaiming the 1.08 area (reflected in the EUR/USD profile).
• GBP/USD stabilized near the 1.25 handle, halting its three‑day slide.
• USD/JPY pulled back after briefly testing the 150 zone, signalling that the initial CPI impulse may have peaked.

May’s Bullish Bias Keeps DXY 99 Within Reach

May seasonality often provides a backstop for dollar bulls. Historically, the DXY has closed higher in most Mays over the past decade – a pattern traders frequently use to fade shallow pullbacks. Market participants link the recurring May strength to corporate dividend‑repatriation flows, reduced liquidity around the early‑May bank holidays, and a seasonal tilt toward haven demand. While no seasonal trade is infallible, this statistical tailwind keeps alive the prospect of another push towards the 99 handle, even as near‑term momentum cools. A sustained close above 99 would open the path to the 100 psychological mark; a failure to hold current range support, by contrast, would call the seasonal bullish setup into question.

The next catalyst arrives with Thursday’s April retail sales report. A stronger‑than‑expected consumption number would reinforce the higher‑for‑longer rate narrative, likely driving short‑end yields up again and putting 99 firmly in the crosshairs. A soft print would give the green light for a deeper retracement, erasing the seasonal advantage. Traders can track the dollar’s relative momentum ahead of the release using AlphaScala’s currency strength meter.