DXY Stalls Despite Inflation Print

The rally in USD has paused into the end of the week. Despite a hotter-than-forecast US inflation print yesterday, DXY seems to be capped by growing uncertainty over the path of the Fed, implications for the US economy, and the various geopolitical risks we’re seeing. On the data front yesterday, annualised US CPI was seen at 2.4% vs 2.3% expected, though still down from the prior month’s 2.5% reading. On the monthly readings, core held at 0.3% for a second consecutive month while headline held at 0.2%.

Jobless Claims Jump

The takeaway from market price action on the back of the data seems to be that, at least CPI was still lower against the prior month. Additionally, an unexpected uptick in weekly jobless claims helped cap USD upside. The Fed’s recent shift onto focusing more on jobs data means that spike in jobless claims (258k vs 231k expected and 225k prior) has added further pause-for-thought for USD bulls.

PPI Due Next

Looking ahead today, focus shifts to the upcoming PPI print this afternoon along with prelim UoM consumer sentiment and inflation expectations. Both sets of data likely to keep the current USD rally capped into the weekend while traders mull external factors such as the war in the Middle East.

Technical Views

DXY

For now, DXY remains capped at the retest of the broken bull trend line, but above 102.46 still. While atop this level, focus is on a continuation higher towards 104.05 next. If we slip back below, focus will turn back to 100.93 as next support to note.