Today, we will receive Consumer Price Index (CPI) data. CPI is a measure of the average change in prices paid by households for a variety of goods and services over some time. This is the most effective indication of inflation in the US.
The Fed has been hiking interest rates for the past year to bring inflation down. A falling CPI is good for the Fed as it indicates their tight monetary policy is working.
If we see CPI data come out lower than the forecast, we will see a substantial slide downwards for the Dollar, and the opposite, if it comes out higher than expected.
Gold will also gain if CPI data comes out lower because falling inflation means that the interest rates may not be hiked as high as initially expected. This in turn could incite investors to shift their cash from safer investments into other assets such as the precious metal.
Bitcoin is picking up steam as it cut through the resistance at $18,000 and we may see it start making a move for the $20,000 mark.
In today’s DIFX Analytics, we’re going to look into the following assets:
S&P is approaching the falling trend line
The index is gaining for the week and is approaching the bearish trend line which has initiated rejections to the downside on numerous occasions.
We can expect the S&P to reach the $4000 range before seeing resistance followed by a slide in price toward $3800 as it continues the bearish trend.
Earnings are coming out for large companies with many expecting lower profits as we begin to see impacts from high-interest rates hit the global economy.
Bitcoin is climbing with intent
Bitcoin’s path to 20,000 has a couple of resistance points that need to be broken on the way.
We are seeing a healthy resurgence from the digital asset as it pushes above both EMA’s on the 4-hour chart.
The 50-day EMA (orange) has started moving upwards and focusing its sights on the 100-day EMA (blue). If the 50-day EMA can intersect the 100-day EMA, then we will have confirmation of more bullish price action.
RSI has climbed to 74 on the 4-hour chart. Late 2021 was the last time when RSI was this high.
EUR/USD hits resistance at $1.07
EUR/USD seems to be at an inflection point. We may be witnessing a bull trap form with the break out above the previous resistance lacking intensity.
If the Dollar manages to find strength against the Euro then we should see the asset slide to these support levels. The first support is at $1.066.
Inflation data will spur some strength in either direction for the FX pair.
Gold consolidating in anticipation of CPI data
Gold is consolidating at $1875 – $1886. The trend has shifted from ascending to descending and is beginning to aim downwards.
RSI is setting lower highs, losing strength. The asset is technically signaling a reversal but today we have CPI data being released. CPI data is an indicator of inflation and should instigate trajectory into the asset.
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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades by the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.
