The release of the latest US inflation data resulted in mixed outcomes, pushing the probabilities of the Federal Reserve’s first rate cut to a later date beyond June’s meeting.

The Consumer Price Index (CPI) increased by 0.4% in February, in line with market expectations. This is the largest increase since August of last year. The Core CPI also increased by 0.4%, which is slightly higher than the estimated 0.3%.

The Year-on-Year data is the most important when it comes to inflation. The Consumer Price Index (CPI) has increased to 3.2%, up from the expected stable rate of 3.1%. However, the Core CPI Year-on-Year (YoY) has continued to decrease, reaching the lowest level since April 2021 at 3.8%, down from 3.9%. This is the 12th consecutive month of a decrease in the Core CPI YoY. These figures indicate that inflation has not yet changed course.

Indicator Actual Forecast Prior
CPI MoM 0.4% 0.4% 0.3%
Core CPI MoM 0.4% 0.3% 0.3%
CPI YoY 3.2% 3.1% 3.1%
Core CPI YoY 3.8% 3.7% 3.9%

 

Despite the turbulence, the US stock market managed to rally yesterday, thanks in part to the Core Consumer Price Index (CPI) Year-over-Year remaining steady. Additionally, fears of inflation have already been factored into the market in recent weeks, and attention is now turning to the upcoming Retail Sales and Producer Price Index (PPI) data, which will be released tomorrow.

DXY short-term bounce

The US Dollar did not gain much yesterday, despite the inflation outcomes. The momentum is not sufficient for a trend change yet. The time/price method still shows that any upside move is merely a short-term retracement before the downside trend resumes.

The next resistance level is at 103.0, followed by 103.30. The bearish outlook remains unchanged as long as the index continues to trade below 103.65 and/or 104.00 without a weekly close above those levels.

Gold rally stalled

Yesterday, the price of Gold dropped significantly from $2184 to as low as $2151. This could be an early indication of another short-term retracement. Technical indicators are currently heavily overbought, making it quite risky to consider buying Gold at the current levels.

According to the time/price method, it is likely that the ongoing retracement continues towards $2125 in the coming days or weeks. Therefore, traders should be very cautious when planning on purchasing Gold near its record high.

Eyes on JPY

Yesterday, the USDJPY saw a rebound following remarks from the Bank of Japan which stated that it needed more data before deciding whether to raise rates at this month’s meeting. The pair reached the resistance level of 148.0, but this level is expected to remain solid until a report is released. However, any further upward movement is likely to be limited. The time/price method has already confirmed that the upward retracement ended last week and that the downward trend has resumed.

The current upward trend is not expected to go beyond 148.70. On the downside, the key support level is at 146.50. If this support level is broken, it could pave the way for further declines towards 145.90.

 

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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