News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Bullish
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • RT @Barnes_Joe: 1: Ahead of the ninth formal round of Brexit trade talks in Brussels, there is a sense of cautious optimism a deal can stil…
  • *BREAKING: Turkish Central Bank regains independence $TRY https://t.co/HwvrRtf08F
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDn8ejP https://t.co/ZcLzt2QlSZ
  • Heads Up:🇬🇧 Winter Economy Plan due at 11:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-24
  • 🇲🇽 Mid-month Inflation Rate YoY (SEP) Actual: 4.1% Expected: 4.05% Previous: 3.99% https://www.dailyfx.com/economic-calendar#2020-09-24
  • 🇲🇽 Mid-month Inflation Rate MoM (SEP) Actual: 0.16% Expected: 0.12% Previous: 0.24% https://www.dailyfx.com/economic-calendar#2020-09-24
  • Chinese Yuan to garner attention amid the FTSE Russell review of Chinese bonds - Expectations are for Chinese bonds to be included in the WGBI - Last month had been the 21st consecutive month of foreign investors increasing exposure to Chinese bonds #CNH
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.76%, while traders in EUR/GBP are at opposite extremes with 66.47%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/TuU1FF6X7g
  • Heads Up:🇵🇱 Monetary Policy Meeting Minutes due at 11:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-24
  • Heads Up:🇲🇽 Mid-month Inflation Rate YoY (SEP) due at 11:00 GMT (15min) Expected: 4.05% Previous: 3.99% https://www.dailyfx.com/economic-calendar#2020-09-24
US Dollar Gains as US Inflation Beats, ECB Undercuts Euro on Rates

US Dollar Gains as US Inflation Beats, ECB Undercuts Euro on Rates

2019-04-10 13:39:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Talking Points

- US Dollar gains on the day have little to do with US economic data: inflation beat expectations, but wages missed. Declining real wages are a negative development for a consumer-based US economy.

- The ECB’s Governing Council seemingly ruled out a rate cut in 2019, even though President Mario Draghi emphasized that “all instruments” were on the table.

- Retail traders are decidedly neutral on EURUSD and EURJPY after the ECB meeting today.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

The US Dollar (via the DXY Index) is seeing gains build at the start of “Super Wednesday.” Traders have already had to grapple with the UK GDP release while they await headlines regarding the EU-UK emergency Brexit summit. But the source of gains for the DXY Index rally may draw into question whether or not today’s gains are based on positive developments for the US economy.

March US Inflation Beats, Wages Miss

Inflation is rebounding in the United States, but the overall picture isn’t terrific. Headline CPI came in at 1.9% versus 1.8% expected, from +1.5%, while Core CPI was on hold at 2.1% (y/y). Rebounding price pressures may be welcomed by the Federal Reserve, who at their March meeting eliminated the prospect of a rate hike this year. But with wage growth figures disappointing, there’s evidence that real wages are shrinking in the US – a poor development for a consumer-based economy.

USDJPY Price Chart: 1-minute Chart (Intraday April 10, 2019) (Chart 1)

US Dollar Gains as US Inflation Beats, ECB Undercuts Euro on Rates

The US Dollar reaction around the March US CPI report was limited, particularly when viewed through the lens of a pair other than EURUSD, which was grappling with ECB President Mario Draghi’s press conference. USDJPY, for example, was barely moved around the data releases, and was trading relatively lower at the time this note was written (111.16 pre-releases; 111.15 post-releases). It’s not a far cry to suggest that US Dollar gains on the day are purely driven by the ECB.

April ECB Meeting Yields Conflicting Message

The April ECB meeting has come and gone without any formal action by policymakers, but that doesn’t mean that FX markets didn’t prove active. The baseline assessment by the Governing Council that interest rates wouldn’t move again this year was seemingly a hawkish development, only to be undercut by ECB President Draghi emphatically saying that “all instruments” were on the table should conditions warrant them.

And will economic conditions warrant the ECB reaching into its toolbox to find any and “all instruments” at its disposal? From the ECB’s own words, “downside risks are increasing.” Markets seems to think so: odds of a deposit rate cut by the end of the year have increased from 15.7% to 22%.

EURJPY Technical Forecast: Daily Price Chart (March 2018 to April 2019) (Chart 2)

US Dollar Gains as US Inflation Beats, ECB Undercuts Euro on Rates

EURJPY's progress at the start of April had been stunted in the run up to the April ECB meeting. After, price is falling below the daily 8-, 13-, and 21-EMA envelope. As a result of sideways trading at the start of the week, price remains in the downtrend from the September 2018 and March 2019 highs. Both daily MACD and Slow Stochastics have returned back to neutral positioning since last week. Another test of the descending trendline near 126.000 may be out of the question now that EURJPY’s momentum is starting to shift to the downside.

DXY Index Technical Forecast: Daily Price Chart (March 2018 to April 2019) (Chart 3)

US Dollar Gains as US Inflation Beats, ECB Undercuts Euro on Rates

Price has ‘caught’ at the daily 21-EMA and started to turn higher with a bullish piercing candle today, following with the hammer/doji yesterday. The lack of follow through after the bearish evening star candle cluster would suggest that bulls have not yet relinquished control; however, it’s far too early to make any kind of decisions “Super Wednesday” still under way and the March Fed meeting minutes due out later today.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES