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February 13th - The U.S. Bureau of Labor Statistics reported on Friday that the January Consumer Price Index (CPI) rose 0.2% month-over-month, slightly lower than Decembers 0.3% increase and also below economists expectations of 0.3%. Excluding volatile food and energy prices, the core CPI rose 0.3% month-over-month, slightly higher than Decembers 0.2% increase. Year-over-year, the CPI rose 2.4%, a slowdown from Decembers 2.7%, mainly due to the high base effect from last year; the core CPI rose 2.5% year-over-year, lower than Decembers 2.6%. The January report included, for the first time, an update to the seasonal adjustment factor reflecting price changes in 2025. Economists pointed out that the core CPI data in January often exceeds expectations because the Bureau of Labor Statistics model fails to fully account for one-off price increases at the beginning of the year. This months increase may reflect both this year-over-year effect and the transmission effect of Trumps broad tariffs. Despite the slowing inflation, a stabilizing labor market may allow the Federal Reserve to maintain interest rates for some time. Economists expect that inflation may rebound temporarily this year due to the transmission of import tariffs and the depreciation of the dollar last year.Following the release of the CPI data, expectations for a Federal Reserve rate cut in 2026 have risen to 61 basis points, up from just 58 basis points previously.US interest rate futures indicate that the probability of a Fed rate cut in June has been slightly raised to 69%, up from 63% before the data release.The market currently believes there is a 30% probability that the Federal Reserve will cut interest rates before April, and an over 80% probability before June.February 13 - On February 13 local time, Wang Yi, member of the Political Bureau of the CPC Central Committee and Foreign Minister, met with US Secretary of State Marco Rubio in Munich.

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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