U.S. Dollar Gains Ground As CPI Exceeds Analyst Expectations
U.S. Dollar Index rallied as traders focused on inflation data. Inflation Rate increased by +0.4% month-over-month in October, compared to analyst forecast of +0.3%. Core Inflation Rate grew by +0.3%, while analysts expected that it would increase by +0.2%.
Higher-than-expected inflation data indicates that Fed will raise rates in December. According to FedWatch Tool, the probability of a 25 bps rate hike in December is 89.5%. Some traders believe that Fed may choose a 50 bps hike to fight inflation.
Currently, U.S. Dollar Index is trying to settle above the resistance level at 102.35 – 102.50. In case this attempt is successful, U.S. Dollar Index will head towards the next resistance, which is located in the 103.15 – 103.30 range.
EUR/USD Retreats As Traders Focus On U.S. Inflation Data
EUR/USD pulled back as traders reacted to U.S. inflation data and bet on hawkish Fed. The market believes that Fed will make two consecutive rate hikes, which is bearish for the European currency.
EUR/USD declined below the previous support at 1.1175 – 1.1190 and is trying to settle below the 1.1150 level. In case this attempt is successful, EUR/USD will move towards the nearest support, which is located in the 1.1110 – 1.1125 range.
GBP/USD Tests Weekly Lows
GBP/USD suffered a sell-off after the release of U.S. inflation data. Oil prices rebounded from session lows and moved higher, putting additional pressure on the British pound.
The nearest support level for GBP/USD is located in the 1.3285 – 1.3300 range. A successful test of this level will open the way to the test of the next support at 1.3185 – 1.3200. RSI is close to the oversold territory, but there is enough room to gain momentum in case the right catalysts emerge.
EUR/USD Price Forecast
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See all EUR/USD forecastsUSD/CAD Moves Higher As Precious Metals Pull Back
USD/CAD tested new highs as traders focused on the sell-off in precious metals markets. Gold is down by -2.9%, while silver pulled back by -4%. Other commodity-related currencies have found themselves under strong pressure in today’s trading session.
USD/CAD moved above the resistance at 1.4155 – 1.4170 and is trying to settle above the 1.4200 level. In case this attempt is successful, USD/CAD will head towards the resistance level at 1.4275 – 1.4290.
USD/JPY Tests New Highs As Japan’s Household Spending Misses Estimates
USD/JPY climbed above the important 158.50 level as traders focused on U.S. inflation data and reacted to the Household Spending report from Japan. The report indicated that Household Spending declined by -2.8% month-over-month in September, compared to anlayst forecast of +0.3%. On a year-over-year basis, Household Spending decreased by -6.8%.
If USD/JPY manages to stay above the 158.50 level, it will head towards the resistance level at 160.00 – 160.50. The key question is whether BoJ is ready to provide support to the yen in case USD/JPY climbs above the 160.00 level. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
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