All eyes are on US CPIs this european afternoon. Meanwhile, the Dollar-Index (DXY) is about to print the ninth green candle in a row and trying to stay above the 100 treshold. The CPI consensus is already quite high with 8.4% YoY and the 10y Treaury-Yield points into the same direction at a mutli-year high of 2.82% at time of writing.
This setup makes the afternoon exciting. A disappointment in the numbers could reverse the bullish Dollar case quickly but the current inflation dynamics are strong and the FED leaves no doubt that they will react at the next meeting on May 4th. In contrast, nothing can be expected from the ECB until June 9th (G10 Central Bank Calendar)
In this respect it is not surprising that Dollar crosses like EURUSD, USDJPY and GBPUSD with the largest share of the DXY are trading at key levels. Any positioning in front of the numbers should be difficult. In any case, you would need deeper pockets, because tight stops are very likely to be filled swiftly. Short-term traders can look for opportunities after the figures were released. The first reaction could be wrong, but it doesn't have to be.
(source: fxstreet.com)
EURUSD -- 1.0862
The multi-year low at 1.0806 is looming and should be key support today. The upside is capped by 1.0935/40 and 1.0990/00 for now. Below the 50 ema (1.1083), the 1.1121 resistance and the red descending trend line the currency pair is trading in bearish territory.
USDJPY -- 125.69
The interim high at 125.10 did not last and the currency pair printed a new multi-year high at 125.77 yesterday noon. We have already seen the 125.76 this morning again. The bias of the currency pair is to the upside although on a overbought scale. As I wrote earlier, there is a lot of room above the 126 threshold. A clear daily close above 126 tonight should be used to get rid of shorts for the time being.
GBPUSD -- 1.3007
This currency pair is another good example of the two-way risk today. Trading just above 1.3000 at time of writing you can toss a coin where we will end tonight. The upside is capped by the mid Bollinger band (1.3123) and the 50 ema (1.3235) for now. To find the next support you have to scroll a fair bit to the left: 1.2675 (lod 23sep2020).
Good luck,
Sebbo