The Greenback is still under Pressure despite Slowing Inflation
After a positive start during the Asian session on Wednesday, the U.S. Dollar index has retreated to a negative territory, while it is trading in a narrow range of 92.33 to 92.90 points since September 7.
U.S. inflation data although they came out lower than was recorded in previous two months didn’t lowered risks that the Federal Reserve may start tapering stimulus program this year. The markets saw an initial “relief rally” on the “little lighter than expected” read on inflation, but the latest CPI data probably won’t change the Fed’s tapering timeline, said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “Whatever they’re leaning towards, I don’t believe today’s numbers were far enough off the mark to change that calculus.”
The jump in inflation this year was prescribed after inflation in the United States that has reached almost 0% in April-May 2020. Other factors that unwind inflation are economic recovery in the U.S. and high commodity prices together with delivery cost and transportation disruptions that create a deficit in the market.
Technically, the U.S. Dollar index demonstrates neutral dynamics for the past three months, but is well above EMA100 and EMA200 averages, which comprise a zone at 92.10-92.20 points on the daily chart. That is a little victory for the Greenback so far.
However, to post further solid gains the index should climb above March highs at 93.44 points and then above August highs at 93.73 points. Only then it may be considered its further upside movement towards 94.50-94.70 points. Moreover, even then it might be not enough to change a long-term downward sentiment. So, it is really premature to claim the dollar is on the long-term upside track.
The EURUSD demonstrates modest optimism in the first half of Wednesday after a decline streak of seven consecutive days. A positive closing on Wednesday would open chances for the pair to return to 1.1880-1.1990/ Mid-term technical picture would strongly depend on the possibility that the price would hold above EMA21 average at 1.1878 on weekly chart. Only a breakthrough of this level would open the Euro a way towards 1.2190-1.2220, a resistance zone that connect highs of February 2019, January 2021 and March 2021.
GBPUSD has demonstrated gains on Wednesday morning too. But, the Cable is seen much stronger to the Greenback after the price for the Pound left a downside channel that has started this June four days ago. Technically, it means that the Cable may return to 2021 highs at 1.4150-1.4220. The pair has a strong support level at 1.3750-1.3770.
There would be not much essential data left during the rest of the week. Among important figures traders should look for are U.S. Retail Sales in August that are expected to decline by 0.8%$ revised figures for August inflation in Eurozone that are still forecasted at 3% delivered before and Michigan Consumer Sentiment Index for September that is forecasted at 72.2 points vs 70.3 points in August.
U.S. inflation data although they came out lower than was recorded in previous two months didn’t lowered risks that the Federal Reserve may start tapering stimulus program this year. The markets saw an initial “relief rally” on the “little lighter than expected” read on inflation, but the latest CPI data probably won’t change the Fed’s tapering timeline, said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “Whatever they’re leaning towards, I don’t believe today’s numbers were far enough off the mark to change that calculus.”
The jump in inflation this year was prescribed after inflation in the United States that has reached almost 0% in April-May 2020. Other factors that unwind inflation are economic recovery in the U.S. and high commodity prices together with delivery cost and transportation disruptions that create a deficit in the market.
Technically, the U.S. Dollar index demonstrates neutral dynamics for the past three months, but is well above EMA100 and EMA200 averages, which comprise a zone at 92.10-92.20 points on the daily chart. That is a little victory for the Greenback so far.
However, to post further solid gains the index should climb above March highs at 93.44 points and then above August highs at 93.73 points. Only then it may be considered its further upside movement towards 94.50-94.70 points. Moreover, even then it might be not enough to change a long-term downward sentiment. So, it is really premature to claim the dollar is on the long-term upside track.
The EURUSD demonstrates modest optimism in the first half of Wednesday after a decline streak of seven consecutive days. A positive closing on Wednesday would open chances for the pair to return to 1.1880-1.1990/ Mid-term technical picture would strongly depend on the possibility that the price would hold above EMA21 average at 1.1878 on weekly chart. Only a breakthrough of this level would open the Euro a way towards 1.2190-1.2220, a resistance zone that connect highs of February 2019, January 2021 and March 2021.
GBPUSD has demonstrated gains on Wednesday morning too. But, the Cable is seen much stronger to the Greenback after the price for the Pound left a downside channel that has started this June four days ago. Technically, it means that the Cable may return to 2021 highs at 1.4150-1.4220. The pair has a strong support level at 1.3750-1.3770.
There would be not much essential data left during the rest of the week. Among important figures traders should look for are U.S. Retail Sales in August that are expected to decline by 0.8%$ revised figures for August inflation in Eurozone that are still forecasted at 3% delivered before and Michigan Consumer Sentiment Index for September that is forecasted at 72.2 points vs 70.3 points in August.
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