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.

TRY TRADING NOW

You can access more of such trade ideas and prompt market updates on the telegram channel.

Author: Adetola-Freeman Ogunkunle

More by this author

Similar

24.05.2023 12:16 What to Trade in June

Hey guys, this is the last full trading week in May, and many forward-looking individuals like myself are already preparing themselves to seize whatever opportunities June may have in store. On this note, I will review a few commodities that have satisfied my quest for swing-trading opportunities in the coming month. Follow me!

23.05.2023 09:15 Will GBP Recover Now?

The Bank of England (BoE) has dramatically shifted its economic forecasts. They no longer expect a recession in the UK and have upgraded their growth projections. This year, the BoE predicts GDP growth of +0.25%, a significant improvement from previous expectations. Next year's forecast is even more optimistic, with a projected growth of 0.75%.

22.05.2023 10:27 Is the Euro Set to Recover Yet?

Here's the scoop: The Bank of England (BOE) is set to accelerate the pace at which it shrinks its balance sheet, according to one of its deputy governors. Currently, the BOE is unwinding about £20 billion of quantitative easing every three months. The goal is to reduce the stock by around £80 billion per year through active sales and maturing assets.

Latest news

01.06.2023 17:04 Gold and the Majors ahead of the NFP

Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.

01.06.2023 16:10 The Oil Market in the Month of June

Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.

24.05.2023 14:14 Gold’s Next Move Could Be Huge!

Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.