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The US CPI data came in lower than expected today leading to the assumption that the Fed will slow down the pace of tightening in the December meeting. The USD Index fell after the announcement suggesting the USD could weaken further.

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USD Index


Fundamental Analysis

The US CPI and CORE CPI data came out today seeing the inflation rate move lower . The CPI m/m held at 0.4% but came in lower than the expected 0.6%. The CPI y/y fell from 8.2% to 7.7% and Core CPI fell from 0.6% to 0.3%. This fall in CPI will help the Federal Reserve decision to slow down the pace of tightening in the December meeting. Investors have seen this as an opportunity to sell the USD and the USD has weakened across the board. (image provided by trading economics)

US Inflation Rate

Technical Analysis

USD Index Analysis

The price was being held at the 110.00 handle before the CPI announcement. This then shifted after with the price falling. Price now looks to be testing the support at 108.00. If this level is ignored by the market then we could see the USD Index move down to the next support level of 105.00. The bullish channel that once existed is now over with this move and we could expect any rallies to be met by sellers in the near future. 

Did you see our GBPUSD Analysis? You can see it here.

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