- USD pressured by a continued advance in equities, DJIA at 25,000.
- US to present a busy calendar, but no first-tier figures scheduled.
Rising US inflation is no longer a concern, at least from how the market ended up after the country's CPI came in better-than-expected for January. US YoY CPI was estimated at 2.1%, beating market's estimates of 1.9%, but the numbers are no news, as yearly inflation has been steadily above 2.0% since last September when it peaked at 2.2%. Nevertheless, the release immediate reaction was a sharp decline in US equities and strength in the greenback, the same reaction the market had a couple of weeks ago after the release of the US Nonfarm Payroll report posting a strong wages' growth.
Subdued inflation has been the main reason for December/January dollar's slump, as it meant a slower pace in rate hikes. Rising inflationary pressures backed the greenback but for the wrong reason, as the American currency gained on Wall Street's panic selling. Now, that inflation is up the greenback is under pressure, again for the wrong reasons, following the lead of equities.
But that scenario is only from the inflation point of view, and there's much more to the market these days, as the poor result of retail sales yesterday resulted in a downward revision of GDP previsions from different Fed´s organism. That should have affected equities that are anyway rallying, also for the wrong reasons.
Anyway, the only truth is the reality: the Dow Jones Industrial Average is at 25,000 ahead of the opening, and the EUR/USD pair flirts with 1.2500, having traded so far, as high as 1.2510, driven by broad-based dollar's weakness. The EU has nothing relevant to offer from the macroeconomic side today, but the US will present a couple of regional manufacturing indexes, the weekly unemployment claims data, and January PPI. Still, sentiment will remain as the main market driver.
The pair trades a handful of pips below a multi-year high of 1.2536 established last January, short-term overbought, according to technical indicators in the 4 hours chart, now modestly retreating from near 1 month high. At the same time, the pair is well above all of its moving averages, with the 20 SMA picking up below the 100 SMA, both in the 1.2360/90 region. The pair has scope to extend its advance toward the mentioned 1.2536 on a break above the daily high, while beyond this last 1.2560 is the next intraday target.
The current 1.2480 region has been a major resistance, and it if holds above it, the risk will remain toward the upside. Supports from the current level come at 1.2440 and 1.2400, with buyers probably re-surging around this last.
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