Will U.S. Inflation Spur The U.S. Dollar Rally?

For now, the Federal Reserve is not worried about inflation but could they be at some point? Traders are awaiting today’s U.S. consumer price report at 13:30 UTC and should brace for an upside surprise amid persistent supply chain bottlenecks and elevated energy prices. Higher-than-expected CPI numbers bring forward interest rate hike bets, which is positive for the U.S. dollar, while lower-than expected inflation figures could lift risk-assets across the board.

EUR/USD technical view:

Euro bulls weren’t able to push the pair back above 1.16, at least not until now. As long as the 1.1620-30 price area remains a hurdle, we favor a test of the crucial 1.15-support with a potential break of that support-mark. A next lower target would be at 1.14. Above 1.1630, however, bulls could push the pair for a test of 1.17.

GBP/USD technical view:

After testing the lower bound of the cable’s support-zone around 1.34 we saw the pound recovering some of its losses, testing the 1.36-hurdle. If 1.36 was the limit, traders should brace for steeper losses towards 1.3350 and 1.33. Only a significant break above 1.3650 could change the sentiment in favor of the bulls with a higher target seen at 1.38.


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