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US Dollar (DXY) Forecast - US CPI and UST 10-Year Sale Hold Sway Over the USD

US Dollar (DXY) Forecast - US CPI and UST 10-Year Sale Hold Sway Over the USD

Nick Cawley, Strategist

US Dollar Price, News, and Analysis:

  • US inflation (April) is expected to jump to 3.6% y/y.
  • USD41 billion 10-year USTs hit the street later in the session.

The eagerly awaited US inflation release for April – 12:30 GMT – will give traders the latest update on price pressures in the US, and expectations are for a hefty y/y increase. In recent weeks, official talk around US inflation has included the word ‘transitory’ in just about every release and Fed chair Jerome Powell continues to look through what he thinks is a short-term spike in prices. Last Friday’s Jobs Report showed weak job creation, dampening fears of inflation, but the latest US Job Openings and Labour Turnover Survey (JOLTS) showed a record 8.1 million job openings in March, while February’s figure was also revised upwards to 7.53 million from 7.37 million. If labour market conditions remain tight, wages will need to rise to bring back workers to cover these shortages.

For all market-moving economic data and events, see the DailyFX Calendar.

Traders should also be aware that later today that there are USD41 billion UST 10-years for sale while on Thursday, USD27 billion 30-years hit the street. While these monthly auctions are normally factored in by primary dealers and investors, this month’s inflation figure may well make investors reassess at what level they bid for these bonds. US Treasury yields remain elevated, but off their recent highs, with the current 10-year offered with a yield of 1.615%.

The US dollar basket (DXY) is currently battling to stay above 90.00. The sell-off from the March 31 high around 93.47 has been fairly relentless and the chart remains pointed to the downside. The 50-day simple moving average is set to fall below the 200-day sma, forming a ‘death cross’, while the 20-day sma has changed for being supportive to capping any DXY upside over the last month. Traders should stay on the sidelines until today’s CPI reading and auction are out of the way.

Moving Averages (MA) Explained for Traders

US Dollar Basket (DXY) Daily Price Chart (August 2020 – May 12, 2021)

US Dollar (DXY) Forecast - US CPI and UST 10-Year Sale Hold Sway Over the USD

What is your view on the US Dollar– bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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

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