Post-USD dollar action systems CPI: EUR / USD, GBP / USD, USD / JPY

US Dollar Speaking Points:

  • The US dollar fell slightly this morning to 8.5% after the CPI was released in March, while the core CPI was at 6.5%.
  • The valuable trend of the US dollar, which was resisting even before the release, this morning’s data brought a slight setback, with bulls bidding so far. Below I see the strategic parameters in the three major USD pairs, EUR / USD, GBP / USD and USD / JPY.
  • Depends on the analysis in the article Price action And Illustrated patterns. To learn more about pricing action or chart patterns, see ours DailyFX Education section.

The March CBI figures were released in the markets this morning And, once again, the CBI’s headline came out above expectations. This time, however, we crossed the 8% marker with an 8.5% print, which is another new 40-year high.

However, the core CPI, which eliminated food and energy, fell slightly short of expectations, printing 6.5% against the expected 6.6%.

However, inflation has risen sharply and the chart below, with a red line around the central bank’s target, helps to show this latest theme.

Title CPI March, 2018 First Year

Chart produced James Stanley

After the White House warned of another high inflation ahead of today’s data release, it appears that this is exactly what market participants are focusing on in the early stages of the matter. USD-strength trends are already well-integrated and can be seen gaining up to another pump following a new annual rise following an aggressive volatility reaction following this CPI release.

Over the past two trading days, you can see the well-structured trend in the daily chart below, creating resistance at the top of the bullish channel that has been playing for about a year now.

US Dollar Daily Price Chart

US Dollar Daily Price Chart

Chart produced James Stanley; USD, DXY In business view

Possibility of US dollar support

At this point, the reversal in the US dollar, including the move this morning after the release of the CBI data, is relatively shallow.

But the US dollar is just back on track Psychological status At 100 and at the end of March the last support was given very low in the trend after the test, and may cause the price to withdraw.

Still, that zone has not been re-tested for support from the topside breakout, as it was ahead of the opposition from the built-in range during the March trade. Before that zone comes into operation, a more intensive support level of 99.62 is planned.

USD Four Hour Price Chart

US Dollar Four Hour Price Chart

Chart produced James Stanley; USD, DXY in tradingview

EUR / USD is in the main area

The key to the breakout potential of the US dollar is related to the possibility of a breakdown in the EUR / USD. The euro is 57.6% of the DXY quote, so logically, it would be difficult to move anywhere from the euro to the dollar without at least some stock.

That argument is complicated by the fact that in EUR / USD, prices have now fallen to the point of long-term support.

From the monthly chart below, we can see strong support for the current region in 2020. This eventually led to a massive bounce of more than 1,500 pipes as the Fed heated the cash printer during the 2020 and 2021 trade.

But as the waves began to recede, sellers have already pushed the pair into a larger space of support. This is a difficult part for marketers.

EUR / USD Monthly Price Chart

eurusd monthly price chart

Chart produced James Stanley; EURUSD In business view

EUR / USD Short term

That long-term support does not require the cancellation of EUR / USD themes. However, this creates a much harder justification when prices are dragged lower than a support test after the recent highs and lows.

To get that support breach, new sellers will be needed to enter the market, and if things are already over-sold we may be stagnant for a while. The retreat will be helpful, which will allow short-term rough trend strategies to be reorganized. There is support before the psychological level of 1.0960 and later 1.1000, each of which may be interested in such an approach. Slightly more we have a long-term trendline projection, which is currently around 1.1025, and this can be considered as the third high-low resistance for rogue series approaches.

EUR / USD four hour price chart

eurusd four hour price chart

Chart produced James Stanley; EURUSD on Tradingview

GBP / USD

GBP / USD a pair late is not ashamed of its roughness.

When the pair fell below the 1.3000 psychological level, in mid-March we encountered a situation similar to the one mentioned above on the cable. This provided quick savings for GBP / USD, and the pair went down 300 pip and finally topped the 1.3300 handle.

However, the sellers are in a very balanced position, and this led to another re-examination of the key psychological level. There are some curves at this point, but no significant gap, which indicates that the pair may sell more and be pulled before new vendors are pushed to the new low level.

Resistance to aggression can be found very close, which turned in support around 1.3054 level. This price has already been tested and the bulls have not yet retreated, leaving the door open for flow up to the 1.3100 area, and the resistance oscillation around 1.3124 is of interest.

GBP / USD four hour price chart

gbpusd four hour price chart

Chart produced James Stanley; GBPUSD In business view

USD / JPY has touched a 20 year high

Some in the field of positive USD systems have found the USD / JPY attractive. And given the ratio differences, it makes sense, at this point the pair is pressing a 20-year high because US prices continue to fly higher where there is nothing identical on the cards for Japan.

USD / JPY Monthly Price Index: 20 year high

USDJPY Monthly Price Chart

Chart produced James Stanley; USDJPY In business view

This is the carry business and when it is shown, it will have an incredible impact. We were talking about the beginning of the ‘Relation Trade’ pricing in the 1st quarter of last year, and when it started to predict the rate hike for 2022 last September, it came back to equilibrium. GBP / JPY as my ‘best trade’ for last year’s Q4 Based on that, those themes still run strong even after six months.

In USD / JPY, we are interested in the last USD / JPY trade in this region, we heard the Governor of BoJ Croda breaking the break and it led to a bit of caution as it trades up to USD / JPY. And around the high water mark of 125.86. This is what helped pull the pair off a few weeks ago, but with no sign of the BoJ embracing, the Bulls are bidding farewell to the pair, while reaching a new 20-year high.

USD / JPY four hour price chart

usdjpy four hour pricing chart

Chart produced James Stanley; USDJPY in business view

USD / JPY may be an attractive pair for USD continuing scenarios. We already saw support for the 125 psychology level this morning after the CPI print and buyers responded quickly with some help from the bullish trendline.

But – if it fails to push the new rise and then retreats, there are two areas of interest for the positive trend to continue. Previous swing-less support is a potential place for an approach like 124.15.

USD / JPY hourly price chart

usdjpy hourly price chart

Chart produced James Stanley; USDJPY in business view

— Author James Stanley, Senior Strategist To DailyFX.com

Follow with contact James On Twitter: JStanleyFX

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