US Dollar Gears Up for Big Move on Today's CPI Report: Pairs and Levels to Trade
All eyes are turned on the upcoming release of the US inflation report scheduled for 13:30 GMT, with the potential to ignite much-needed volatility for the US dollar index and FX markets in general after a rather subdued period so far this week.
Among the major currency pairs, the USD/JPY and USD/CAD stand out as ones gearing up for potentially significant moves, but don’t forget about the other major pairs, as well as gold and silver.
Anticipated US CPI Figures
Before delving into which levels to watch, let's revisit the key aspects to observe in Thursday's Consumer Price Index (CPI) report.
Analysts are predicting that headline US CPI data will reveal a rise in inflation to an annual rate of 3.2% in December on a headline basis, compared to 3.1% in November. On a monthly basis, the CPI is expected to increase by 0.2%, following a 0.1% rise in the previous month. The core reading, which excludes food and energy, is projected to be at 3.8% year-on-year or 0.3% month-on-month.
Don’t forget that the devil is in the detail, and it is important to consider the influences behind December’s inflation data as they could sometimes be more important than the headline figures themselves.
Following last week's rebound, the dollar index has shown marginal downward movement ahead of the CPI data, displaying limited fluctuations in either direction, which is hardly surprising.
The prevailing trend for the dollar is arguably bearish, as evidenced by objective technical factors like the 200-day average positioning above the market and the occurrence of lower lows on larger time frames since its peak in October around 107.35.
From a technical standpoint, I am inclined towards selling the dollar near resistance rather than buying it at
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