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August 12th - Data from the U.S. Department of Labor shows that U.S. electricity prices rose 4.2% in July compared to the same period last year. With many U.S. residents turning on air conditioning during the hottest month on record, higher electricity bills are expected. In recent months, electricity price increases have outpaced overall inflation, placing additional pressure on consumers energy expenditures on top of rising fuel costs.August 12th - According to CBS News, U.S. inflation slowed for the second consecutive month, rising 3.4% year-over-year in July, in line with economists expectations, indicating that some price pressures may be easing. Moodys Analytics chief economist Mark Zandi pointed out before the July CPI data release that the average daily gasoline price in July was about 10 cents lower than in June. Data from the U.S. Bureau of Labor Statistics also showed that gasoline prices fell 2.9% month-over-month in July. Zandi added that if there is no further escalation in the Iran war, inflation may have peaked and could continue to decline for the remainder of the year, potentially falling to near the Federal Reserves 2% annual inflation target by the same period next year.UBS said on August 12 that, overall, today’s US CPI report was quite close to our expectations and consistent with our previous view that US inflation peaked in May and is slowly declining, although this slowdown may be uneven.August 12th - Analyst David Uberti stated that inflation has cooled in recent months, partly due to a slight decline in gasoline prices. However, this situation is likely to change in August. Data from the U.S. Department of Labor shows that gasoline prices fell 2.9% month-over-month in July, while fuel oil prices fell 1.7%.August 12th - According to CNBC, Wednesdays CPI report showed that price increases for many goods and services slowed, potentially reducing the urgency for the Federal Reserve to raise interest rates in the near future. Data released by the U.S. Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose 0.1% month-over-month in July after seasonal adjustment. The core CPI, excluding food and energy prices, rose 0.2% month-over-month. Year-over-year, the CPI and core CPI rose 3.4% and 2.5%, respectively. Although inflation remains significantly above the Feds 2% target, the relatively modest monthly increase in July, coupled with similarly modest data in June, suggests that the energy-price-driven inflationary momentum from earlier this year is easing. However, prices remain highly volatile and vulnerable to ongoing developments in the Middle East.

The Dollar Index's Top-to-Bottom Reversal Indicates a Potential Momentum Shift

Drake Hampton

Apr 11, 2022 10:52

On Friday, the US Dollar fell versus a basket of foreign currencies after gaining more than 100 points for the first time in over two years. It reached a high of 100.20 during the session, its highest level since May 2020.

 

Despite the fact that it formed a potentially bearish closing price reversal top, it ended the week up 1.3 percent. Throughout the week, the dollar index was mostly supported by a rise in US Treasury yields and a weaker Euro.

 

The June US Dollar Index closed at 99.753 on Friday, down 0.007 or -0.01 percent. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) closed at $26.68, an increase of $0.01 or 0.02%.

 

On Friday, the US Treasury 10-year yield surpassed 2.7 percent for the first time in three years, aided by the likelihood of more aggressive Federal Reserve tightening. Additionally, this week's release of the Fed's March meeting minutes revealed that "many" members were prepared to raise rates in future months in 50-basis-point increments.

 

In other news, the Euro was under pressure as the election battle between President Emmanuel Macron and far-right contender Marine Le Pen tightened in France, the Euro Zone's second-largest economy. Macron continues to lead polls.

Technical Analysis of the Daily Swing Chart

According to the daily swing chart, the primary trend is upward. However, Friday's closing price reversal top implies that momentum is about to move downward.

 

A move above 99.745 will confirm the price reversal top at the close. This could initiate a 2-3 day adjustment. A break of 100.200 will invalidate the chart pattern and suggest the resumed uptrend. The primary trend will revert to the downside upon a break of 97.730.

 

Minor values range from 97.730 to 100.200. The nearest support level is at its 50% level, or pivot, of 98.965.

 

The critical support level is the long-term Fibonacci retracement level around 98.200.

Scenario of the Bear

Persistent movement below 99.975 indicates the existence of sellers. Taking out 99.745 will confirm the price reversal top at the close. If this generates sufficient downside momentum, expect the selling to extend towards the minor pivot at 98.965.

Scenario of Bullishness

Sustaining a move over 99.975 indicates the presence of buyers. The initial objective on the upside is 100.200.

 

If 100.200 is breached, the closing price reversal top will be invalidated, signaling the resumption of the uptrend. If buying is sufficiently strong, we may see an acceleration to the upside, with the next big objective of 100.560 – 100.930.

 

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