Calm before a potential US inflation storm? :: InvestMacro


– An uneasy calm prevailed in financial markets on Wednesday as investors eagerly awaited the latest US inflation data due to be released this afternoon.

Inflation is expected to rise 8.8% year-on-year in June, compared to 8.6% in May. If forecasts match reality, this would be the fastest increase in consumer prices since the 8.9% figure in December 1981. Given how highly sensitive and reactive markets remain to anything to do with inflation, the pending report could spark fireworks across the board.

Ahead of the report’s release this afternoon at 1:30 PM GMT, there are a couple of hidden gems and gems in the forex markets to watch closely.

Is it not possible to stop speculators on the rise of the dollar?

The Dollar Index (DXY) is very bullish on the daily charts. Prices remain in a healthy uptrend and are comfortably trading above the 50, 100 and 200 day simple moving averages. A strong move above 108.50 could lead to a rally to levels not seen since June 2002 at 110.00. If prices fall below 107.60 areas, this could lead to a technical rebound towards 106.70 and 105.50, respectively.

EURUSD Reaches Parity… What Next?

The EURUSD dream of parity became a reality yesterday as the currency pair accepted 1.000 for the first time in 20 years. Such strong psychological support can be difficult for the bears to crack in the short term. Prices may see a technical bounce back to 1.0200 before selling resumes. If the bears remain ruthless and invade this level, EURUSD may extend its decline towards 0.9900.

GBP/USD fluctuates around 1.1900

There could be a broad sell-off on the horizon for GBPUSD as 1.1900 is a key level of interest. The trend is very bearish but the bears need some fresh inspiration to pull the currency pair lower. A stronger dollar could lead to such selling, opening the way towards 1.1650. If the 1.1900 level proves to be a reliable support, it could bring prices back to the 160 point range.

Eyes AUDUSD 0.6700

The path of least resistance for AUDUSD is pointing south. There were lower lows and ever-decreasing tops. Bears seem to be taking a bit of a rest, dragging prices back towards 0.8800. Such a development could bring the bears back into the picture with 0.6700 serving as the first checkpoint.

USDJPY hovering around a 24-year high

USDJPY bulls are still trying to push prices to new highs for several decades

Prices are steadily bullish on the weekly charts and have already broken above the resistance level of 136.70. The breakout and daily close above 136.70 may inspire a higher move towards 138.50 and 142.00. In case the bulls run out of momentum, prices could drop again towards 134.00.

GBPJPY in a choppy uptrend

Things are still looking choppy on the weekly time frame. After failing to break above 167.50, the bears seem to be on the move and ready to attack if given the chance. Prices are still in a very wide range with the breakout needed to determine the long-term technical outlook for GBPJPY. Strong breakout and daily close below 158.00-higher low might trigger selling towards 151.00. If the bulls manage to break above 167.50, it could point to a move towards 170.00.

USDCAD ready to break the resistance?

After bouncing within a range for the past few weeks, the USDCAD currency pair is likely to prepare for a major breakout. Technically, prices are trading above the 50, 100, and 200-day simple moving averages while the MACD is trading to the upside. A strong move above 1.3050 could point to a rise towards levels not seen since November 2020 at 1.3200. If 1.3050 proves to be a reliable resistance, prices may fall again towards 1.2930 and 1.2860 respectively.

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