CPI release will decide the next FOMC step

CPI release will decide the next FOMC step

2023-07-12 • Actualizada

Today's focus is on the US CPI data, which experts believe will be better than expected. The forecasted US CPI m/m is 0.3%, and y/y is 3.1%, a positive sign for the market as the Fed's inflation target is 2%. Even a strong inflation reading may lead to one more interest rate hike, keeping traders somewhat worried. The reaction of the 2-year Treasury yield and the dollar index will indicate the Fed's next move. With inflation slowing down, the path of least resistance for the US equity market is skewed to the upside.

US DOLLAR - D1 Timeframe

UsDollarDaily-1107.png

The US Dollar on the daily timeframe has reached a significant mark. As the chart highlights, the demand zone presents a reliable point of interest for a likely reversal in the price action toward the resistance trendline. If the CPI figures are higher-than-expected, this is likely the course of movement on the Dollar.

Analyst’s Expectations: 

Direction: Bullish

Target: 102.779

Invalidation: 100.938

GBPUSD - D1 Timeframe

GBPUSDDaily-1107.png 

The upward movement of GBPUSD has been a steady climb in a channel pattern which seems to now be approaching a key area of resistance. As shown in the attached chart, the supply zone has further confluence from the resistance trendline and could be a turning point for the bullish price action - should the CPI favor the Dollar, as I mentioned earlier.

Analyst’s Expectations: 

Direction: Bearish

Target: 1.28280

Invalidation: 1.30393

EURUSD - D1 Timeframe

 EURUSDDaily-1107.png

EURUSD is another likely candidate for a brilliant reversal stunt. We currently see price trading within the supply zone right next to a major pivot level from the Weekly timeframe. Based on this and the likelihood of a positive CPI outcome for the Dollar, I would look for opportunities to short the market, possibly to the support trendline.

Analyst’s Expectations: 

Direction: Bearish

Target: 1.08948

Invalidation: 1.10985

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

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