FX markets are still seeing huge volatility on the back of updates on the conflict in the Middle East, however more key US inflation data is due this week and traders are expecting to see strong moves in the dollar around the event. Last weeks PCE and CPI data reinforced market pricing that hope for rate cuts this year from the Federal Reserve are receding quickly. If PPI data comes in near or above expectations, then we could see further dollar strength around the data release and then over the medium term once geopolitcal influences recede.
The market the is expecting a +1.1% month-on-month print for the headline figure and a +0.4% month-on-month for the Core data and anything further north will lead to some dollar buying on the majors, whilst a weaker print could see rate cut hopes revive marginally and the dollar to fall lower.
The Euro is setting up nicely from a technical perspective on that data as it sits near recent high levels and short term resistance, this will give bears the opportunity to use those levels to leverage into short positions on the back of any strong data, whilst bulls will be looking at a break trade to the topside if that data comes in below expectations.
Resistance 2: 1.2078 – 2026 High
Resistance 1: 1.1795 – March High and Trendline Resistance
Support 1: 1.1672 – 200 Day Moving Average
Support 2: 1.1490 – Trendline Support
