The lower than expected US inflation data last week wasn’t enough to propel the greenback into new highs. The US Treasury yields are now back to pre-US CPI levels and the market continues to price roughly two rate cuts by year-end. The Fed is fully expected to hold rates steady at the upcoming meeting.
On the GBP side, the hotter UK CPI report led to some slightly more hawkish repricing but it was followed by weak UK employment data the day after that eventually kept the bets on a 25 bps rate cut at the upcoming BoE meeting alive.
On the 1 hour chart, we can see that we might now have a range between the 1.3368 support and the 1.3480 resistance. The market participants will likely continue to play the range until we get a breakout on either side. An upside breakout should see the buyers extend the rally into the 1.36 handle next. The sellers, on the other hand, will look for a downside breakout to extend the correction into the 1.32 handle.
This article was written by Giuseppe Dellamotta at investinglive.com.
