How Will CPI Change the Market?
On Wednesday, the US dollar weakened in anticipation of the US CPI data, which could influence market exposure. A Bloomberg survey predicts a year-on-year read of 5.0% to the end of April. Market sentiment is affected by the US debt ceiling and issues with regional banks. While the major APAC equity indices are in the red, Japan's TOPIX index is near 33-year highs. Yesterday, the New York Fed President confirmed that the FOMC's future decisions will depend on the data. Treasuries have seen little movement, while gold is slightly higher and crude oil has softened. China has expanded its crackdown on foreign companies involved in espionage, leading to the expulsion of a Canadian diplomat from Shanghai, while USD/CAD remains steady just below 1.3400. US CPI data will be the main economic release today, although German CPI and Italian industrial production may also garner attention. Let’s see how things look on the charts.
US Dollar - H4 Timeframe
US Dollar has had a tumultuous few weeks with a lot of whipsaw movements across-board. From the chart above we can see price trading within a wedge pattern, and recently bouncing off the resistance from the 50 and 100 period moving averages on the H4 timeframe. What this means for me, as a trader, is this: once the horizontal support I marked gets broken, then the Dollar’s weakness would be properly confirmed.
Analyst’s Expectations:
Direction: Bearish
Target: 101.248
Invalidation: 101.841
GBPUSD - H1 Timeframe
Based on the alignment of the moving averages on the H1 timeframe of GBPUSD, one can easily conclude that the price action is bullish. As a result of the recent bounce from the support provided by the 50 and 100-period moving averages on the hourly timeframe, I have plotted a Fibonacci expansion, which will help me find the possible targets for the current price action.
Analyst’s Expectations:
Direction: Bullish
Target: 1.26881
Invalidation: 1.25797
EURUSD - H1 Timeframe
The 200 period moving average on the H4 timeframe is the cause for the recent bullish pressure EURUSD is currently experiencing. The movement has also created a structure that gave the Fibonacci expansion levels, as shown on the chart. My expectation of further bullish movements is based on the correlation of the price action on the US Dollar chart, as cited earlier. The 100 period moving average is my target.
Analyst’s Expectations:
Direction: Bearish
Target: 1.09902
Invalidation: 1.09485
USDJPY - H1 Timeframe
The hourly timeframe’s price action on USDJPY is currently constrained in a channel, trading between two parallel trendlines. It is important to note how the trendline resistance here aligns perfectly with the 200-period moving average, which provides additional confluence in favor of a bearish forecast. The target, in this case, is the trendline support on the same H1 timeframe.
Analyst’s Expectations:
Direction: Bearish
Target: 135.000
Invalidation: 135.498
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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