The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
How Will USD react to Core PCE Price Index?
What will happen?
Core PCE Price Index will be announced at 15:30 MT (GMT+3) on Friday, October 1.
The index is different from Core CPI as it only measures goods and services targeted towards and consumed by individuals. Prices are weighted according to total expenditure per item which gives important insights into consumer spending behavior. This is rumored to be the Federal Reserve's favorite inflation measure.
Last time the result met the expectations, but GBP/USD rose, as the result was lower than the previous one.
How to trade on Core PCE Price Index?
- If the Core PCE Price Index is greater than forecast, the USD is likely to strengthen against other currencies.
- If the Core PCE Price Index is lower than forecast, the USD is likely to weaken against other currencies.
Instruments to trade: USD/CAD, USD/CHF, GBP/USD
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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