Traders should be on high alert on Tuesday, as the U.S. Bureau of Labor Statistics is expected to release October inflation figures in the morning. Against this backdrop, volatility is likely to pick up later this week, with market direction and underlying FX moves dependent on the strength or weakness of upcoming consumer price index data.
In terms of consensus estimates, the forecast for the Consumer Price Index (CPI) suggests a 0.1% month-on-month (m/m) increase and a 3.3% year-on-year (y/y) rise for the headline CPI. Meanwhile, the core CPI gauge is expected to show a 0.3% m/m increase and a 4.1% y/y increase. In the context of these estimates, a significant positive deviation in inflation results would likely be favorable for the overall U.S. dollar. Conversely, a weaker-than-expected CPI report, falling below consensus forecasts, is anticipated to act as a hindrance for the U.S. dollar. Labor Statistics is expected
This article delves into critical technical levels for USD/JPY, GBP/USD, and AUD/USD, identifying potential points of support or resistance that could come into play in response to substantial price fluctuations in the upcoming trading sessions.
After a minor pullback earlier this month, USD/JPY has regained its poise, clearing a significant hurdle at 150.90 and ascending toward its 2022/2023 high, just shy of the psychological 152.00 mark. With the pair on an upward trajectory and flirting with a key level, traders should exercise caution as Tokyo may step in unexpectedly to prevent further yen weakness and suppress speculative activity.
In the event of Japanese authorities intervening in the FX market, there is a risk of USD/JPY quickly breaking below 150.90 and sinking towards 149.00. Additional losses from here on out could shift the focus to 147.25. On the flip side, if Tokyo refrains from intervention and allows USD/JPY to push above 152.00, we could see a move towards the upper limit of a medium-term rising channel at 153.50.