EUR/USD, GBP/USD and AUD/USD rebound on lower US inflation
EUR/USD, GBP/USD and AUD/USD spike higher, as US inflation data lifts hopes of a pivot from the Fed.
EUR/USD breaks resistance as US CPI lifts pivot hopes
EUR/USD saw a sharp push higher yesterday, as the latest US inflation survey brought hope that we may have turned a corner. While this could mark the beginning of a trend that may ultimately lead to a pivot from the US Federal Reserve (Fed), it is worthwhile noting that inflation remains highly elevated and is still a major problem that is far from resolved.
Nonetheless, with Fed members mentioning the potential to slow the pace of tightening in response, we are now looking at a 50-basis point (bps) rise in December. While the long-term picture brings expectations of economic decline and the potential for a second wave of inflation, the near-term sentiment has certainly taken a positive turn. The break through $1.1098 has ended the 2022 trend of lower highs, signalling a strong chance that we see the bulls back in charge once again for the time being. As such, further upside seems likely for now, with a break back below $0.9935 required to negate that view.
GBP/USD pushes through trendline and horizontal resistance
GBP/USD has been heading sharply higher as the dollar loses traction. Much like the eurozone, UK inflation continues to stand well above that of the US. Hence the pivot outlook actually looks more likely to come from the Fed before the European Central Bank (ECB) and Bank of England (BoE).
This should help cable continue its ascent, with the push through $1.1738 bringing a bullish signal. As such, more upside does look likely despite disappointing UK gross domestic product (GDP) data this morning. Keep an eye out for $1.1829 Fibonacci resistance up ahead as a potential hurdle. However, the key resistance level comes in the form of the $1.2293 swing-high. For now, further upside looks likely unless we see the price decline below $1.1146.
AUD/USD spikes through resistance to bring wider retracement
AUD/USD has similarly seen the price turn sharply higher as the dollar comes under pressure.
The break up through $0.6547 resistance brings the wider retracement into view, although the near-term hurdle comes in the form of the prior low of $0.6681 and 100-day simple moving average (SMA). In any case, the push through $0.6547 does signal a likely upward move from here, with the bearish pressure built over the course of recent months finally released for what could be a more positive phase for the pair.
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