US March CPI highest since December 1981
The US released March inflation data earlier today. The headline CPI print was 8.6% YoY vs 8.5% YoY expected and 7.9% in February. This was the highest inflation reading since December 1981! The large increase over last month’s reading was primarily due to an increase in food and energy prices. The core CPI for March, which excludes these volatile components, was “only” 6.5% YoY vs an expectation on 6.6% YoY and 6.4% YoY in February. This was the highest level since August 1982. These result help to further Fed Governor Evans claim from yesterday that a 50bps hike is highly likely at the May FOMC meeting.
Yesterday, the White House warned the markets that these numbers would be strong, which led many to believe they would be stronger than estimates. However, after the release of the data, the markets felt a sense of relief (fearing the prints could be worse) and the US Dollar moved lower. Price traded from 100.20 down to 99.74 before bouncing.
Source: Tradingview, Stone X
Trade DXY now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute timeframe, DXY has been moving higher in an orderly channel since March 31st. However, yesterday the US Dollar Index began moving sideways and traded out of the channel. Although it reached a near-term new high today at 100.23, the RSI is diverging, which was a signal price may have been ready for a pullback. Support is at the March 28th highs near 99.37. Below there, price can fall to the lows from March 30th at 97.74. First resistance is at the bottom trendline of the upward sloping channel and the 161.8% Fibonacci extension level from the highs of March 28th to the low of March 30th near 100.41. Above there price can trade to the highs from April 2020 at 100.93.
Source: Tradingview, Stone X
Trade EUR/USD now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
EUR/USD has been moving in a similar, but opposite direction of DXY. Price had been moving lower in an orderly channel since March 31st and traded sideways, out of the channel. However, unlike the DXY, EUR/USD did not make a new near-term low today. First support is at the lows from April 8th near 1.0836, then the lows from March 7th at 1.0806. Just below there, support is at the 161.8% Fibonacci extension from the lows of March 28th to the highs of March 31st, near 1.0792. Resistance is at the March 28th lows near 1.0945, then horizontal resistance at 1.1028. If price breaks above there, it can run to the highs of March 31st at 1.1190.
Source: Tradingview, Stone X
US CPI came in hot today! However, markets may have expected it, thanks to a warning from the White House yesterday. Therefore, traders may have sensed a little relief that the number wasn’t worse and markets did the opposite of what one may expect. Watch to see if the markets correct themselves over the next few days, especially if more talks of a 50bps hike at the May FOMC meeting begin to make the rounds!
Learn more about forex trading opportunities.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024