EUR/USD retreats while USD/CAD, USD/CNH rise on higher US inflation reading
Outlook on EUR/USD, USD/CAD and USD/CNH amid rising US CPI, yields and dollar.
EUR/USD drops on higher-than-expected US inflation
EUR/USD's rise to the upper July-to-October downtrend channel resistance line at $1.0639 has been followed by a swift sell-off as US consumer price index (CPI) inflation came in slightly higher-than-expected which led to bond yields and the US dollar appreciating.
Below Thursday’s low at $1.0526 lies the key $1.0484 to $1.0444 support zone. Provided it holds, EUR/USD may still bottom out from a medium-term perspective. This support area consists of the mid-November high, early and December low and January low.
Minor resistance may be encountered by the last Friday’s high at $1.06 and the late-September high at $1.0617, followed by the May low and mid-September low as well as this week’s high at $1.0632 to $1.0639. Only a rise and daily chart close above these levels would confirm a bottoming formation.
USD/CAD surges back up again as greenback appreciates
USD/CAD, which spent the last couple of weeks in retreat and dropped to C$1.357, has resumed its ascent on higher-than-expected US CPI data with the cross retesting its C$1.3694 September peak. Around it the currency pair is stalling, though.
A slip towards minor support at the C$1.364 August high may ensue with further minor support seen around Wednesday’s C$1.3624 high.
A rise above this week’s high at C$1.37 would put the current October high at C$1.3785 back on the cards.
USD/CNH creeps higher on disappointing China data
As deflation is a worry in China after inflation data there missed expectations of a rise, USD/CNH is cautiously advancing towards the upper end of its mid-September-to-October sideways trading range at CN¥7.3316.
If overcome, the August and September highs at CN¥7.3497 to CN¥7.3681 could be back on the map.
Slips should find support between the 55-day simple moving average (SMA) and the late-September low at CN¥7.2848 to CN¥7.2811 ahead of the July-to-October uptrend line at CN¥7.2785.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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