Dollar On Watch As Traders Brace For US CPI Today
US Inflation On Watch
The US Dollar looks to be in wait-and-see mode as traders brace for the latest US inflation data due this afternoon. Friday-s bumper US jobs data sparked a fresh rally in the greenback as rate pricing for a Fed hike ahead of year end surged from around 50% to above 70%. Traders are now looking to today’s data as the potential catalyst for the next push higher in DXY. On the numbers front, the market is looking for headline annualised CPI to rise to 4.2% from 3.8% prior. If seen, thus would be the first +4% reading since 2023 and will certainly see rate-hike expectations jumping again, likely leading to a breakout in DXY. Core annualised inflation is expected at 2.9% from 2.8%. While not as high as the headline reading, any increase here should keep USD well-bid with any upside surprise likely to amplify gains through the back end of the week.
US/Iran Update
Alongside the data, traders are also keeping an eye on the latest Middle East headlines. The situation remains incredibly volatile with conflicting headlines almost every day at the moment. Following Trump’s comments earlier in the week calling for a return to the ceasefire and an end to attacks between Israel and Iran, the US and Iran were seen exchanging attacks overnight following Iran shooting down a US helicopter in the Strait of Hormuz. While tensions remain elevated, and oil prices remain higher, USD looks prone to continued upside as inflation expectations remain skewed higher.
Technical Views
DXY
For now, DXY remains within the bull channel, stalled beneath the 100.36 resistance which has capped the market since early last year. If we break higher here, focus is on the 101.91 level next along with the bull channel highs. Below, 99.15 and the channel lows are the key supports to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.