Traders Watch Out!
The DXY is likely to see significant volatility with the US CPI for January due today (9:30pm GMT+8), with the current forecast expecting data to be released at 6.2% (Previous: 6.5%).
A slowdown of inflation growth could reinforce the Fed's view of disinflation and could lead to the DXY trading significantly lower. This is because investors would increase on bets that the Federal Reserve would be less likely to continue with its hawkish comments and over-the-top interest rate hikes.
With the DXY currently trading along the 103.20 price level, weakness in the DXY could see the price slide lower toward the key support level of 102.650. However, before the retest of the 102.65 price level, the price would have to first break through the round number support of 103.
However, it would be foolish to rule out the possibility that the data surprises markets, with a higher-than-expected release. (Considering that energy prices traded higher in January)
Trade with Caution
The DXY is likely to see significant volatility with the US CPI for January due today (9:30pm GMT+8), with the current forecast expecting data to be released at 6.2% (Previous: 6.5%).
A slowdown of inflation growth could reinforce the Fed's view of disinflation and could lead to the DXY trading significantly lower. This is because investors would increase on bets that the Federal Reserve would be less likely to continue with its hawkish comments and over-the-top interest rate hikes.
With the DXY currently trading along the 103.20 price level, weakness in the DXY could see the price slide lower toward the key support level of 102.650. However, before the retest of the 102.65 price level, the price would have to first break through the round number support of 103.
However, it would be foolish to rule out the possibility that the data surprises markets, with a higher-than-expected release. (Considering that energy prices traded higher in January)
Trade with Caution
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US CPI was released slightly higher than expected at 6.4% (Forecast: 6.2% Previous: 6.5%).
With almost complete market consensus expecting the CPI to be released at 6.2% or lower, the data release saw SIGNIFICANT volatility in the DXY as the price first spiked upon reaction to the data release, followed by a sharp retrace down to the 102.65 support area!
With all the stops likely to have been taken out with the fluctuation, the DXY has continued to trade higher and could climb steadily to the immediate resistance of 103.80.
However, the danger is not over yet... US retail sales data releasing tomorrow!