US Dollar Faces Important Challenge In Form Of Inflation Report


Technical Bias: Bullish

Key Takeaways

  • US dollar index reversed from an important support zone yesterday.

  • Intraday gain in the dollar index seems to have found quite decent strength.

  • EURUSD was one of the worst performers as it traded towards 1.2700.

Looking ahead, attention turns towards the US consumer price index which is expected to come in at 1.6% versus 1.7% previous. If it registers an increase, the US dollar might gain traction moving ahead.

Technical Analysis

Markets were in a bit of a better mood this morning as the dollar index mostly consolidated yesterday’s gain. It fell recently towards 84.75 where it found an important support in the form of a bullish trend line on the 4 hour timeframe. The dollar index bounced sharply from the mentioned support area, and closed back above the 200 simple moving average (SMA) – 4H. Yesterday during the NY session, it was seen struggling around the 50 SMA (4H) which acted as a hurdle for the US dollar buyers. There is a critical resistance towards the upside around 100 SMA (4H) which also coincides with the 50% Fibonacci retracement level of the last drop from the 86.72 high to 84.52 low. So, there is a high probability that if the US dollar index manages to climb towards the stated confluence area, then it might struggle to gain strength above it.

Daily Market Commentary

On the downside, the 200 SMA (4H) might continue to act as a support for the US dollar index. Any further downside might call for a retest of the all-important bullish trend line. Sellers need a close below the same for sustained downside moving ahead.

US Consumer Price Index

There is an important economic release lined up during the NY session i.e. the US Consumer Price Index by the US Bureau of Labor Statistics. The forecast is of 1.6% increase in September 2014, compared to the last year. It would be interesting to see how the US dollar behaves post release, especially if outcome misses the expectation.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD steady below 1.0800 after US PCE meets expectations

EUR/USD steady below 1.0800 after US PCE meets expectations

EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips.  Fed Chair Jerome Powell set to speak ahead of the weekly close.

EUR/USD News

GBP/USD hovers around 1.2620 in dull trading

GBP/USD hovers around 1.2620 in dull trading

GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.

GBP/USD News

Gold price sits at all-time highs above $2,230

Gold price sits at all-time highs above $2,230

Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.

Gold News

Jito price could hit $6 as JTO coils up inside this bullish pattern

Jito price could hit $6 as JTO coils up inside this bullish pattern

Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.

Read more

Key events in developed markets next week

Key events in developed markets next week

Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.

Read more

Majors

Cryptocurrencies

Signatures