The US Dollar’s Decline After Inflation Data Release

US economic indicators suggest slowing inflation and unchanged retail sales, hinting at potential interest rate cuts. The S&P 500 hits an all-time high, while gold surges. USD/JPY shows bearish trends, with key support levels being closely monitored.

US economic indicators hint at potential interest rate cuts, leading to a decline in the US dollar and a surge in gold prices.

US Economic Indicators and Market Reactions

Key economic indicators for the US were released recently, impacting the financial landscape. Core Price Index (CPI) monthly: actual = 0.3%, expected = 0.4%, previous = 0.4%. Core Price Index (CPI) annual: actual = 3.4%, expected = 3.4%, previous = 3.5%. Retail Sales monthly: actual = 0.0%, expected = 0.4%, previous = 0.6%. Despite concerns over rising inflation, retail sales remaining unchanged hint at potential interest rate cuts, as per Reuters.

Market Reactions to Economic Indicators

Market participants reacted to signs of slowing inflation, raising expectations for rate cuts and pushing the S&P 500 stock index (US SPX 500 mini on FXOpen) to an all-time high. Gold prices also surged to levels not seen since April 21. Other currencies gained strength against the US dollar.

USD/JPY Trends and Technical Analysis

An intriguing trend is unfolding on the USD/JPY chart, with Fibonacci ratios revealing three instances where price recovery stalled around the 0.382 level. Recovery from B to C after an impulsive decline from A to B. Recovery from D to E following a decline from C to D. Recovery from F to G after a 3-wave decline from A to F.

Technical Analysis of USD/JPY

Technical analysis of USD/JPY suggests fading demand with each attempt to resume the upward trend within the blue channel. The local peak at G indicates resistance along the median line, potentially signaling continued bearish dominance and downward price movement. If this trend persists, support levels at 151.85, 150.88, and the psychological level of 150.00, along with the lower channel boundary, will be crucial tests for bearish intentions.

Conclusion

The US dollar’s decline following the release of inflation data has led to significant market reactions, including a surge in gold prices and a bearish trend in USD/JPY. The potential for interest rate cuts has also been hinted at, which could further impact the financial landscape. As always, market participants should monitor these developments closely and adjust their strategies accordingly.