US Dollar is trading in a fairly narrow range ahead of Thursday’s main event.
The US Dollar (USD) is now trading over 102, but analysts and markets are predicting. That it will fall lower on Thursday. The long-awaited US inflation report, in the form of Consumer Price Index (CPI) numbers, will be issued. Expectations are that it will come in lower than expected. With some analysts citing the recent contraction in Purchase Managers Indices and lower Crude Oil prices as factors.
A large data dump is expected to cause volatility for traders at 13:30 GMT.
Traders will also need to go through the other data pieces that will be released around 13:30 GMT. The weekly Jobless Claims figures are expected soon. And they might either counterbalance or accelerate any moves based on the US inflation conclusion. From 13:30 till the start of the US opening bell, expect a turbulent ride.
US Dollar Technical Analysis
According to market participants, the US dollar is projected to fall further. The proof is in the pudding, with US Fed futures indicating that the Fed will lower rates as soon as May. Confirmation of this forecast will come with the release of US inflation data on Thursday. If they fall further, the timing of the rate cut may be altered. shifted up to March, implying further US Dollar depreciation ahead.
The first level to watch on the upside is 103.00, which is closely in line with the trend line drawn from the tops of October 3 and December 8. The 200-day Simple Moving Average (SMA) at 103.43 comes into play if broken and closed above. The 104.00 level may be too far away, with 103.78 (55-day SMA) as the next resistance level.
To the downside, a rejection of the declining trendline will feed Greenback bears, resulting in a deeper decline. The line in the sand here is 101.74, the floor that held for half of December before collapsing in the last two weeks. Expect the DXY to snap at this level if it does. to see a test at a low of about 100.80
