How Will CPI Change the Market?

How Will CPI Change the Market?

2023-05-10 • Updated

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


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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How Did EUR React to the ECB Meeting? 
How Did EUR React to the ECB Meeting? 

The European Central Bank (ECB) has raised interest rates by 25 basis points, marking its tenth consecutive rate hike since July 2022 and bringing the total increase to 450 basis points. The ECB is primarily concerned about high inflation levels, both current and projected, with concerns extending into the future.

Can the CPI Release Reverse The USD? 
Can the CPI Release Reverse The USD? 

The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.

Will the NFP help the greenback?
Will the NFP help the greenback?

The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes.

Latest news

Gold is Rising Despite Inflation Returns
Gold is Rising Despite Inflation Returns

Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.

Can the Chinese Economy Recover?
Can the Chinese Economy Recover?

Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.

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