Not much has happened in the market on Tuesday with the U.S. dollar being little changed.
Traders are awaiting reports on the U.S. consumer-price index (today at 12:30 UTC) and retail sales (Friday). The figures will help to shape expectations about the likely timeline for Fed tapering and any eventual rate hikes. Today’s CPI numbers will be the last such release ahead of the FOMC November rate decision at which the Federal Reserve is expected to announce the start of tapering asset purchases.
Meanwhile, the upcoming data releases could spur added stagflation concerns. September inflation could be higher than expected and retail sales lower.
The release of CPI numbers could come as a big driver for U.S. dollar flows, so traders should brace for some volatility today.
EUR/USD: The pair extended its losses to a low of 1.1524 and if we now get a break below 1.1490, we could see the pair further tumbling towards 1.1450 and maybe even 1.1410. In case of a pullback, bulls will have to watch out for a rise above 1.1610 and further above 1.1670 in order to anticipate higher targets at 1.17 and 1.18.
GBP/USD: A sustained break above 1.37 could drive the pair towards 1.3850 but sterling bulls should be cautious since sterling’s outlook clouded over somewhat. A next lower target is however seen at around 1.3370.
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