US consumer inflation slowed to 8.5% in July from 9.1% a month earlier. As we had pointed out, the fact was noticeably lower than the forecasted 8.7%, and this caused an immediate market reaction. FedWatch Tool showed the market's estimate of a 75-point hike in the Fed Funds rate at the end of September fell from 68% to 33%.

The currency market and index futures also saw a momentary reaction. The Dollar Index lost 1% within 15 minutes of publication, confirming its status as the market's most important economic indicator.

The technical picture keeps a close eye on how the day will close. A DXY consolidation below 105.20, where the 50-day moving average and the local August lows are concentrated, could be confirmation of a reversal of a Dollars' bull trend since May 2021. For most of these 14 months, the Fed has been tightening its rhetoric and accelerating rate hikes.

A sharp slowdown in inflation and signs that this move will continue in the coming months set the markets up for a reversal of Fed rhetoric. Right now, a 50-point rate hike is the most likely scenario.

Further prospects are shrouded in uncertainty and tightly linked to inflation data. The Fed may move to a 25-point rate hike in November or December. The key word is "uncertainty" because it determines the degree of market volatility and investor sentiment. We are near the point of a cycle change, which means we are not in danger of a calm market.

Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts' opinions are for informational purposes only and should not be considered as a recommendation or trading advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD eyes more weakness despite higher-than-expected monthly Retail Sales data

AUD/USD eyes more weakness despite higher-than-expected monthly Retail Sales data

The AUD/USD pair is expected to slip down to near 0.6400 despite the release of the lower-than-expected monthly Retail Sales data. The economic data has landed at 0.6%, higher than the estimates of 0.4%, but lower than the prior release of 1.3%.

AUD/USD News

EUR/USD renews 22-year low as yields propel DXY, focus on ECB vs. Fed drama, energy crisis

EUR/USD renews 22-year low as yields propel DXY, focus on ECB vs. Fed drama, energy crisis

EUR/USD takes offers to refresh multi-year low during seven-day downtrend. US Treasury yields rally to fresh cycle highs amid fears of economic slowdown, hawkish central banks. Energy crisis in Eurozone joins fears of more drama on the Russia-Ukraine issue to keep bears hopeful.

EUR/USD News

Gold turns sideways around $1,630 as investors await Fed Powell’s speech

Gold turns sideways around $1,630 as investors await Fed Powell’s speech

Gold price is displaying a dull performance as investors have sidelined ahead of the speech from Fed chair Jerome Powell. The precious metal is juggling around $1,630.00 after a modest decline from the critical hurdle of $1,640.00.

Gold News

Binance Coin price could shed more than 10% if this trend continues

Binance Coin price could shed more than 10% if this trend continues

Binance Coin price has been on a downtrend for quite some time and has intensified after the recent sell-off in Bitcoin price. Investors need to pay close attention to the BNB’s moves over the last three weeks, which revealed a bearish setup.

Read more

Lower gas prices and favorable views of labor market again boost confidence

Lower gas prices and favorable views of labor market again boost confidence

The Consumer Confidence Index rose to its highest level since April, and now sits more than 12 points higher than where it was just two months ago. Falling gasoline prices and a still-tight labor market are the main reasons we have seen a recent rebound in confidence.

Read more

Majors

Cryptocurrencies

Signatures