U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Talking Points:

– U.S. CPI came-in next expectations during 2.2% v/s 2.3%. While this is above a Fed’s idea of 2%, most of a arise is being attributed to appetite prices.

– The U.S. Dollar forsaken on this morning’s print, and this continues a 2017 down-trend in a banking after final week’s NFP news brought on a annulment around a pivotal section of resistance.

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It was only a week ago that an deplorable NFP imitation helped to pull a Dollar behind into a 2017 down-trend. And around most of this week, a Dollar was offering reduce as sellers re-gained control of near-term cost action. But as we walked into CPI on Friday morning, a bit of strength had begun to uncover forward of a print, opening a doorway to a probability of a deeper pierce of USD-strength.

This morning’s acceleration review for Sep came in during 2.2%, only next a expectancy of 2.3%. Core CPI printed during 1.7% contra a 1.8% expectation; so we had a slight volume of beating there as well. Reading within a number, and contributing to this pierce of USD-weakness on this +2% CPI imitation is a fact that most of those cost gains came from appetite prices. The net response was re-ignition of USD debility as a Dollar slanted down to exam this week’s lows:

U.S. Dollar around ‘DXY’: Fresh Two Week Lows on Inflation Disappointment

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Chart prepared by James Stanley

This near-term pierce of USD-weakness continues a longer-term bearish trend that’s hold in a Dollar this year. Last week saw insurgency set in a pivotal area that runs from 94.08-94.30, and given afterwards sellers have taken over.

U.S. Dollar around ‘DXY’ Daily: 2017 Down-Trend Continues After Last Week’s Resistance Test

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Chart prepared by James Stanley

While Sep acceleration came-in next expectations, this still echoed stability alleviation after a summer impassivity in us acceleration figures. After a Fed hiked rates in March, CPI began to tumble dramatically from a Feb high of 2.7% to a Jun low of 1.6%. As worries began to mountain around how prolonged that thesis of weaker cost expansion competence continue, Fed Chair Janet Yellen continued to contend that she suspicion that debility was short-lived and that acceleration would continue to improve. In a FOMC mins expelled progressing this week, we schooled that this view isn’t indispensably a accepted opinion during a Fed, as mixed house members uttered regard that a slack seen in acceleration might be some-more than transitory.

US CPI Climbs Back Above 2% in September

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Prepared by James Stanley

Yesterday we looked during a array of setups around a U.S. Dollar forward of this morning’s CPI print. Of sold seductiveness in a thesis of USD-weakness was a awaiting of bullish delay in EUR/USD. After a jaw-dropping run from underling 1.04 to start a year to over 1.2000 in September, EUR/USD began to cold as we walked into Q4. Prices changed down to a feeder section of support, during that indicate buyers began to step-in. This lasted for a small over a week as cost movement put in a grub nearby a long-term support zone, though as USD-weakness has re-fired after final week’s NFP report, EUR/USD has begun to pierce aloft again, giving a coming that a new retracement might be impending a end.

EUR/USD Hourly: Thursday Losses Reversed as Bulls Drive Higher post-CPI

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Chart prepared by James Stanley

We also looked during a top-side of NZD/USD with seductiveness around a .7150 turn to open a doorway for bullish continuation. With prices rising above that figure, traders can now start to demeanour for higher-low support in a bid of trade a deeper USD-selloff. Support display around a before indicate of near-term insurgency around .7150 can open a doorway to such a setup, with eyes on stop waste next a before swing-low around .7100.

NZD/USD Hourly: Kiwi Reversal Continues to Show

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Chart prepared by James Stanley

We also looked during USD/CHF for a deeper bearish pierce after insurgency began to uncover during a pivotal area. This insurgency printed on a under-side of a before bullish trend-line, and this comes-in next a pivotal turn of .9770, that had formerly helped to set a high in a span for a few months before a topside dermatitis progressing in Oct faltered.

Swissy Hourly: Bearish Reaction to Confluent Resistance, Trend-Line + .9770

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Chart prepared by James Stanley

Also of seductiveness is a deeper pierce of strength in GBP/USD. Cable has been utterly flighty this week, putting in a exam of a 1.3000 psychological turn after carrying traded above 1.3600 only a few weeks ago. But that 1.3000 exam didn’t utterly come to pass as buyers stepped-in about 25 pips before that turn came into play, and given that low was set yesterday, a stimulating bullish convene has begun to uncover in a British Pound, during slightest on short-term charts.

GBP/USD Hourly: Cable Continues Impressive Rally After Yesterday’s Support Test

U.S. Dollar Drops, 2017 Down-Trend Continues as Inflation Disappoints

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

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