10 YR Yield, EUR/USD, USD/CAD, Russell 2000 Forecasts – US Inflation in Focus

US10Y Technical Analysis

The US 10-year yield is the first thing I’m watching today. It looks like we did pull back a bit from the 4.1% level over the last couple of days. If we can break above the high reading of Thursday at 4.107% then I think you see a huge rush to the US dollar.

It will be interesting to see how this plays out because we’ve gotten the advanced GDP quarter-over-quarter at 1.4% instead of the expected 2.8%. But you have to take that with a grain of salt because the US government is partially shut down and it’s just distorted numbers.

We also had the core PCE price index number come out and the reading was 0.4% instead of the expected 0.3%. So that suggests that maybe the US economy is going to force the Federal Reserve to stay higher for longer. We’ll just have to wait and see. With this, I’m paying close attention to this because if yields start rising, that could make the dollar attractive.

EUR/USD Technical Analysis

Looking at the Euro, we have seen a bit of a double bottom near the 1.1740 level. I’m watching that closely. If we break down below there, then I suspect we get a move down to the 1.16 level.

On the other hand, if we turn around and rally, then I think we are just going to end up consolidating a bit as we have seen more of the same grind and nothing much going on in the market as of late. It is one that I think is primed to try to make a move, but it just hasn’t been able to.

USD/CAD Technical Analysis

The US dollar has been rising against the Canadian dollar during the trading session on Friday as we continue to threaten the 50-day EMA. But I do think there’s a bit of a barrier at the 1.3750 level.

If we can break above there, which is about 50 pips above where we are now, then I think the dollar gets very bullish. This W pattern probably kicks off a move back to the 1.3920 level. If we fall from here, then you’re looking at sideways choppiness more than anything else as we continue to at least attempt to build a base.

Russell 2000 Technical Analysis

The Russell 2000 is an index I’m watching because I watch it a lot to see what’s going on with the rest of the US stock market. This one will get worse than the other ones quite quickly, but if it does start to turn around, that typically will put upward pressure on the NASDAQ 100, the S&P 500, the Dow Jones 30, etc.

So, I use this as a significant tertiary indicator. 2600 has been massively supported in the past. I expect it to continue to be so. We have the 50-day EMA below and it would not surprise me at all to see this thing turn around during the day, thereby lifting some of the other indices.