Forex Today: Dollar ends eight-day positive streak

Matías Salord FXStreet

During the Asian session, New Zealand will report Electronic Card Retails Sales data and Australian Confidence surveys are due. Later in the day, the key reports will be the UK employment data and the German ZEW survey.

Here is what you need to know on Tuesday, September 12:

The positive streak of the US Dollar Index (DXY) finally ended after several consecutive days of gains. The pullback was triggered by some improvement in risk sentiment. The Nasdaq increased by 1.14%, while the S&P 500 climbed 0.67%. As a result, the DXY retreated from above 105.00 to 104.55. US Treasury yields moved sideways, with the 10-year yield hovering around 4.28%.

The US Dollar's direction could remain uncertain as key US economic reports are awaited. The Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday will provide more inflation data. These figures will be crucial in shaping expectations for the September 19-20 Federal Open Market Committee (FOMC) meeting.

Analysts at TD Securities on US CPI inflation:

Our forecasts for the CPI report suggest core price inflation likely remained subdued in August: We expect it to print 0.2% m/m for a third consecutive month. We also look for a larger 0.6% gain for the headline, as gasoline prices surged. Importantly, the report is likely to show that the core goods segment stayed deflationary, while shelter-price gains probably slowed. Note that our unrounded core CPI inflation forecast is 0.20%, so we see balanced risks around any surprises in August.

EUR/USD reached a six-day high and is currently consolidating around 1.0750. The bias for the upcoming Asian session is tilted towards the upside, but the overall trend still remains to the downside. The German ZEW survey will be released on Tuesday. The focus is on the European Central Bank (ECB), which will have its monetary policy meeting on Thursday.

"I would rather err on the side of over-tightening, " said Catherine Mann from the Bank of England on Monday. GBP/USD rose for the second time in the past eight days, reaching the 1.2550 area. The rebound occurred near the 200-day Simple Moving Average (SMA). On Tuesday, the UK will release employment data, followed by monthly GDP figures on Wednesday.

The Japanese Yen soared during the Asian session following Bank of Japan's Governor Ueda's comments, stating that interest rates could rise by year-end if wages rise enough. USD/JPY dropped below the 146.00 level and reached levels under the 20-day SMA but then rebounded to the 146.50 area.

USD/CAD declined for the second consecutive day, reaching weekly lows near 1.3550. The outlook could turn bearish in the short term if prices stay below the 20-day SMA, which stands at 1.3575.

AUD/USD rose above 0.6400, boosted by the weaker Dollar and a rebound in commodity prices. NZD/USD climbed above 0.5900, extending its recovery from multi-month lows. The outlook for Antipodean currencies has improved, and positive market sentiment suggests further gains are likely.

Metals experienced a pullback during the American session but finished higher. Silver closed above $23.00, and Gold finished near $1,920, far from the daily high of $1,931.

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Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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