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CPI Could Drive The Dollar Further Down

The upcoming consumer price index (CPI) report for July is projected to indicate a 0.2% monthly increase and a 12-month rate of 3.3%, marking a decline from last year’s 8.5%. Inflationary pressures have shown a reduction since 2022. Despite signs of easing, experts emphasize caution due to inflation’s historical persistence. Housing costs are decreasing, and wage gains are slowing down, but concerns remain about rising health insurance expenses and surging gas prices. While some believe recent trends might deter further interest rate hikes by the Federal Reserve, others, like former Fed Governor Richard Clarida, suggest the Fed should remain vigilant in its fight against inflation.

US Dollar – D1 Timeframe

The US Dollar as seen in the attached chart image seems to have commenced the initial reaction away from the supply zone, and is likely aiming for the demand zone as highlighted in the image. Among the multiple confirmations in favour of this movement is; the trendline resistance, bearish moving average array, resistance from the 50 and 100 period moving averages, as well as the 88% of the Fibonacci retracement level.

Analyst’s Expectations:

  • Direction: Bearish
  • Target: 100.159
  • Invalidation: 103.580

EURUSD – D1 Timeframe

After breaking above the previous high and the trendline, we now see price making a move away from the trendline support on EURUSD and possibly aiming for the recent high. This move has confluences from the moving average support, trendline support, 76% of the Fibonacci retracement, as well as the bullish array of the moving averages on EURUSD.

Analyst’s Expectations:

  • Direction: Bullish
  • Target: 1.11943
  • Invalidation: 1.09526

GBPUSD – D1 Timeframe

Here on the GBPUSD chart attached,we can see the trendline support spanning several months altogether, with price being initially rejected from it. The 50-period moving average also provides credible support for price and thus increases the likelihood of continued bullish price action on GBPUSD

Analyst’s Expectations:

  • Direction: Bullish
  • Target: 1.29388
  • Invalidation: 1.26803


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