EUR/USD: rising inflation supports the case for a rate hike
|EUR/USD Current price: 1.1204
The American dollar traded marginally higher against most of its major rivals during the first two sessions of the day, as risk sentiment returned to markets, dragging stocks lower in Asia and Europe. Movements across the FX board however, were restricted ahead of the release of the last piece of relevant data of the week, US August inflation. Consumer prices in the US rose by more than projected in August ticking up to 0.2% from previous flat reading at 0.0%. The year-on-year figure also came in better-than-expected, up by 1.1% whilst the core yearly reading printed 2.3%.
The EUR/USD pair fell to a fresh weekly low of 1.1198 right after the release, as the strong figures support the case of a FED rate hike. From a technical point of view and for the short term, the bearish momentum seems ready to extend, as in the 1 hour chart, the price has accelerated its decline below its moving averages that anyway remain within a tight range, reflecting the latest range, while the technical indicators have turned strongly lower within negative territory. In the 4 hours chart, the price is breaking below also directionless moving averages, whilst technical indicators also heading south within negative territory, adding to the bearish case on a downward acceleration below 1.1200.
Support levels: 1.1200 1.1160 1.1120
Resistance levels: 1.1235 1.1280 1.1310
GBP/USD Current price: 1.3160
View Live Chart for the GBP/USD
The GBP/USD pair extended its decline below the 1.3200 level following the release of strong US inflation data, with the Pound already pressured by the conservative stance of the Bank of England, after their Thursday's economic policy meeting. The pair is nearing its weekly low, set at 1.3138 last Wednesday, and the intraday technical picture suggests that the pair may extend its decline, as in the 1 hour chart, the price is further below a modestly bearish 20 SMA, whilst the technical indicators head sharply lower near oversold readings. In the 4 hours chart, the price has been capped by a bearish 20 SMA, currently around 1.3210 while the Momentum indicator head sharply lower below its 100 level and the RSI also declines around 37, leaving room for further slides on a break below the mentioned weekly low.
Support levels: 1.3135 1.3100 1.3060
Resistance levels: 1.3170 1.3210 1.3250
USD/JPY Current price: 101.03
View Live Chart for the USD/JPY
The USD/JPY pair spiked up to a fresh daily high of 102.16 following the release of upbeat US inflation figures, but it's still incapable to settle above the 102.00 level, broken late Thursday. During the upcoming week, both Central Banks will have their economic policies meetings. Chances of the FED acting as soon as this month are low, and on the contrary, market is expected some kind of easing announcing coming from the BOJ, which should favor the upside in the pair. Still the upward potential seems limited from a technical point of view, as the pair has been clearly bearish pretty much since late January. Short term, the 1 hour chart shows that indicators turned higher within neutral territory, but that the price is below its 100 and 200 SMAs, both heading modestly lower in the 102.20/30 price zone. In the 4 hours chart, technical indicators remain well below their mid-lines, barely losing their downward strength, whilst the price holds below its 100 SMA, around 102.40, and the level to surpass to confirm a more constructive outlook for this Friday.
Support levels: 101.60 101.25 100.70
Resistance levels: 102.40 102.90 103.35
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