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US Inflation Cools
The US Dollar has turned sharply lower through the middle of the week following a weaker set of US inflation figures yesterday. Annualised headline CPI was seen cooling to 2.3% from 2.4% (prior and expected) last month. Additionally, both monthly readings came in below forecasts, underscoring the weakness in inflation. While still above the bank’s 2% target, the move lower comes at a time when the US outlook has become more uncertain. The prospect of a potential trade deal between the US and China will have big implications for the inflation forecast meaning that rate-cut expectations might start to come back into focus near-term if talks look to be moving towards a trade agreement.
Trump Calls for Rate Cuts
Alongside the drop in inflation we’ve heard fresh rate-cut calls from Trump this week. The US president took to his Truth Social account to once again accuse Fed chairman Powell of being too late in cutting rates. For now, it seems that the expected inflationary impact of the US trade war is yet to materialise. Given that Trump’s trade agenda looks to now be softening (UK trade deal, negotiations with China), inflation could well be headed back to target if we see a continued fall at the next reading. With this in mind, USD is likely to remain pressured near-term.
Technical Views
DXY
The rally in DXY has stalled for now into a test of the 101.91 level and the bear channel highs. With that resistance area holding, risks of a fresh push lower are seen. Price is currently probing support at the 100.38 level with 99.56 the next support if price continues south.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.