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Has inflation peaked and what next for the Dollar? – The Macro Setup

Has inflation peaked and what next for the Dollar? – The Macro Setup

Daniela Sabin Hathorn, Analyst
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THE MACRO SETUP OVERVIEW:

• The S&P 500 bounces off key trendline support once again

• The US Dollar is stuck for direction

Bitcoin stagnates around $45,000 after being rejected above $50,000

WHERE IS THE DOLLAR HEADING?

US equities have come under a bit of pressure recently which has played in nicely with the recent trend in the S&P 500, which has been bouncing off a key trendline support for the past year. The pullbacks towards the trendline have been narrowing as the trend has progressed, from almost 9% back in October 2020 to under 2% this past week, playing into a neat ascending channel, which is showing that the range is narrowing slowly.

We also looked at the Apple chart as the company is planned to unveil its latest iPhone today, especially as some investors view Apple stick as cheap given their dominance in the market and their fundamental drivers. But the stock is at its most expensive relative to expected growth in the coming year which may cause investors to see it less attractive going forward.

The data point of the day was the US CPI, which came in lower than expected and that plays nicely into the Fed’s transitory rhetoric, which is also evident in US yields, which are looking to test lower once again. On the back of this, the US Dollar has been trading sideways for the past few months and is slightly confusing as to where it is heading, given it is lacking the momentum to break key levels in accordance with the moves in the yields.

Moving on to Bitcoin, it looks like a challenging time for the cryptocurrency as it failed to fill the $5,000 gap between $50,000 and $55,000 as the chart is showing a lot of indecision as to where the direction is heading given its reaction to recent headlines.

We also looked at a chart of Crude Oil, the Nikkei 225 and EUR/GBP ahead of some key releases this week.

*For commentary from Dan Nathan, Guy Adami, and myself on the US Dollar, Bitcoin, Oil, the Nikkei and EUR/GBP amongst others, please watch the video embedded at the top of this article.

CHARTS OF THE WEEK

BTC/USD TECHNICAL ANALYSIS: DAILY CHART (CHART 1)

Has inflation peaked and what next for the Dollar? – The Macro Setup

NIKKEI 225 ANALYSIS: WEEKLY CHART (CHART 2)

Has inflation peaked and what next for the Dollar? – The Macro Setup

EUR/GBP TECHNICAL ANALYSIS: DAILY CHART (CHART 3)

Has inflation peaked and what next for the Dollar? – The Macro Setup

--- Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

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

DISCLOSURES