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Tide Turns For USD

Following a strong start to the week yesterday, the US Dollar is seen surrendering gains on Tuesday as traders begin looking beyond Friday’s Jobs data toward the US CPI release due tomorrow. An upside beat on the headline NFP reading as well as an improvement in the unemployment rate saw USD climbing on hawkish Fed expectations. However, sentiment has turned against USD as European traders return from their Easter break ahead of US CPI tomorrow.
 

US CPI In Focus

The headline CPI reading is expected to fall back to 5.2% from 6% the prior month. If such a drop is confirmed, or even surpassed, this should see Fed rate hike projections firmly lowered leading the USD deeper still. The rally in risk assets is also diverting attention away from USD today with Bitcoin seen breaking above $30k for the first time in over a year. Later today, Fed’s Goolsbee and Harker will be speaking, following on from hawkish comments this morning from Fed’s Williams who called on the Fed to hike rates further to help cool prices.
 

Technical Views

DXY

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The Dollar Index is currently sitting on a big ledge of support within the broader bear channel which has framed the decline from last year’s highs. Should price break below the 101.27 level there is room for a deeper push towards the 99.46 and 97.60 levels next. 

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