Focus on DXY and GBP/USD Ahead of Key Economic Prints: CPI and GDP
This week, the spotlight is on the US Dollar Index (DXY) and the GBP/USD pair as major event risks, including US inflation (CPI) and UK GDP, take center stage.
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1/9/20242 min read
Focus on DXY and GBP/USD Ahead of Key Economic Prints: CPI and GDP
Introduction:
This week, the spotlight is on the US Dollar Index (DXY) and the GBP/USD pair as major event risks, including US inflation (CPI) and UK GDP, take center stage. The analysis in this article utilizes chart patterns, along with key support and resistance levels, to assess potential market movements.
US Dollar Index (DXY) Hesitation Before CPI Data:
After a robust jobs report last week, USD traders are anticipating the release of US CPI data for December. Despite the positive employment figures, the trend of downward revisions in previous Non-Farm Payroll (NFP) prints raises caution. The core measure, excluding volatile food and fuel prices, is expected to dip below 4%, while the headline measure is anticipated to see a slight increase from 3.1% to 3.2% year-on-year. The US dollar's recent seesawing, hovering near the critical 103.00 level, signals a hesitation that may continue depending on the CPI data outcome. A potential downside surprise in inflation could contribute to a longer-term downtrend for DXY, targeting around 101.90.
GBP/USD Consolidation Amidst GDP Concerns:
The GBP/USD pair is experiencing a pause in bullish momentum, as indicated by the MACD and a reluctance to trade above 1.2736 for extended periods. Multiple upper wicks at and just above this level further highlight resistance. UK GDP data for November is expected to reveal modest growth or even contraction, posing challenges for a sterling bullish case. Despite these concerns, the pairing of a less optimistic outlook for both the pound and the dollar may result in a consolidation phase for GBP/USD. The pound's yield advantage suggests that the pair could maintain current levels and potentially retest the recent high at 1.2828, despite uncertainties surrounding GDP data.
Conclusion:
As traders await the outcome of US CPI and UK GDP releases, both DXY and GBP/USD are poised for potential shifts based on economic prints. The intricate analysis of chart patterns and key levels provides insights into possible market directions amidst the current economic landscape.