ANALYSIS OF THE AMERICAN DOLLAR AND CONVERSION POINTS
US CPI: Holder – 5%; EST: 5.2% US CPI: Core – 5.6%; EST: 5.6% FOMC Focus minutes later today. Money markets show a moderate price revaluation that minimizes the possibility of a rate hike in June.
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FUNDAMENTAL CONTEXT OF THE DOLLAR
“The all-items index rose 5.0 percent in the 12 months to March, the smallest 12-month increase since the period ending in May 2021.”
US CPI data missed headline estimates (see economic calendar below), while core inflation excluding food and energy rose to 5.6% reflecting the inflationary pressures of the service sector. Major contributors to the core inflation figure include shelter, motor vehicle insurance, airfares, home furnishings and operations, and new vehicles; while the health care index and the used car and truck index were among those that declined during the month – Source: US Bureau of Labor Statistics.
US ECONOMIC CALENDAR
Source: DailyFX Economic Calendar
Fed funds futures (see table below) have fallen in terms of overall conviction for a 25 bps interest rate hike in May to 67% of approximately 74% pre-ICP The call for a further rate hike in June is losing steam and it looks likely that the terminal rate will peak. 5% for the current voltage cycle. Given the recent banking crisis and tight credit conditions, another headline beat may have added to the already tough environment for the Federal Reserve. That said, the day doesn’t end there, as the FOMC minutes from the previous meeting are due and could give us more insight into the Fed’s thinking going forward.
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PROBABILITIES OF RAISED RATES FROM THE FED
Source: Refinitiv
TECHNICAL ANALYSIS
DAILY CHART OF THE AMERICAN DOLLAR INDEX
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The daily chart of the dollar index (DXY) sold off immediately after the release of inflation towards 101.42 low swing, with 101.00 h Psychological support is very much a possibility before the opening of the US trading session.
Resistance levels:
Support levels:
— Written by Warren Venketas for DailyFX.com
Contact and follow Warren on Twitter:@WVenketas
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