Will the US dollar face resistance as the CPI peaks out?
12.05.2022
- UK Q1 GDP (Preliminary Estimate)
- U.S. Initial Jobless Claims
Yesterday, the U.S. dollar rose briefly amid concerns over tightening expectations following the release of the U.S. Consumer Price Index, which came in at a high 8.3%. However, the dollar’s gains were short-lived, and the EUR/USD pair rebounded from 1.050 to 1.057. Since the EUR/USD has been fluctuating around the 20-period moving average on the 4-hour chart since the latter half of last month, we will carefully monitor the situation to see whether the pair continues to trade within this range or breaks out.
European currencies saw the pound fall even against the already weak Oceania currencies, resulting in a broad decline across the board for the pound. The GBP/AUD pair fell by about 200 pips from 1.775 to 1.756. Following the decline, the pair has been trading around the 200-period EMA on the 4-hour chart, searching for direction. We will need to watch for any movement during European trading hours and keep an eye on the relative strength between the weak Australian dollar and the pound.
Today’s schedule includes the UK’s Q1 GDP (flash estimate), industrial production, and trade balance at 15:00 CET; Swiss producer and import prices at 15:30 CET; and US initial jobless claims and the producer price index at 21:30 EST;at 23:30, U.S. weekly natural gas inventories; at 24:35, remarks by BOC Deputy Governor Gravel; at 26:00, a U.S. 30-year Treasury auction; and at 29:00, remarks by San Francisco Fed President Daly. We should remain cautious regarding the movement of the U.S. dollar, as the upside has become heavy due to the CPI peaking out.
Author: Keisuke Sakurai
