FX traders are preparing for a busy day ahead on Wednesday with some key data due out of the US which could see the dollar move sharply either with the recent trend or back into recent higher ranges. The greenback has pushed higher off recent multi-month lows in the last few sessions but is still sitting at relatively low levels after a raft of lower data prints over the last few weeks. This month has seen the Non-Farm Payrolls, CPI, PPI, and Retail Sales numbers all come in lower than expected which has seen Fed rate hike expectations for September fall sharply from above 60% to around 40%.
There is a raft of US data all set to drop early in the New York session on Wednesday with GDP numbers and Durable Goods data all being released at the same time, however the most impactful figures are likely to be the FOMC’s favoured inflation data, the Core PCE Price Index numbers. The market is expecting to see a 0.2% increase in the month-on-month number with the annual figure coming in at 3.2%, which would reinforce the hawkish message that we got from the Fed last week at the conclusion of their meeting, despite recent data updates. Anything stronger would push the case strongly back for a rate hike in September and see the dollar push higher, while weaker numbers could see a rate hike for September taken completely off the table and see the dollar break into fresh downside ranges.
The Euro is sitting nicely positioned for a good move on the data sitting just below recent multi-month highs, and a weaker print could see it break resistance and push high towards 1.1850 while a stronger number would see if pull back into recent ranges, with short term support on the daily trendline and 200 day moving average likely to provide a good pivotal level.
Resistance 2: 1.1848 – April High
Resistance 1: 1.1711 – August High and Trendline Resistance
Support 1: 1.1631 – 200 Day Moving Average and Trendline Support
Support 2: 1.1422 – Long Term Trendline Support
