April’s US CPI rates to shake the markets

The US CPI rates for April are set to be released during today’s American session and could result in high volatility in the markets leading up and following their release. The current expectations by economists are for the CPI rates on a core and headline level to remain steady at 2.8% and 2.4% respectively. In turn market participants may be looking closely to see if there are any deviations from the expected figures, thus should they come in lower than expected, implying easing inflationary pressures in the economy, the release could weigh on the dollar. On the other hand, should the CPI rates showcase an acceleration of inflationary pressures, it may have the opposite implications which in turn could aid the greenback, as it may imply that the Fed may need to keep their monetary policy restrictive for a prolonged period of time.Treasury Secretary Scott Bessent stated his talks with Japan were productive which in turn, may imply that a trade deal between the US and Japan may be nearing. Sticking to the Japan narrative, the bank’s summary of opinions appears to have showcased some hawkish with one member noting that the bank “must conduct monetary policy in a nimble and flexible manner such as by resuming rate hikes in response to changes in U.S. policy,” one member was quoted as saying in the summary” implying that the bank may continue on their rate hiking approach, which in turn may have provide some support for the JPY.In the political landscape, President Donald Trump has arrived in Saudi Arabia and thus close attention may be warranted, as deals may be announced between Saudi Crown Prince Mohammed bin Salm and President Trump.

EUR/USD appears to be moving in a downwards moving fashion, following the pair breaking below our support now turned to resistance at the 1.1185 (R1) level. We opt for a bearish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure close to 40 implying a bearish market sentiment, in addition to the MACD indicator. For our bearish outlook to continue we would require a break below our 1.0950 (S1) support level, with the next possible target for the bears being the 1.0740 (S2) support line. On the other hand for a bullish outlook we would require a clear break above the 1.1185 (R1) resistance line with the next possible target for the bulls being the 1.1420 (R2) resistance level. Lastly, for a sideways bias we would require the pair to remain confined between the 1.0950 (S1) support line and the 1.1185 (R1) resistance level.

XAU/USD appears to be moving in a sideways fashion, after breaking below our upwards moving trendline and then failing to clear our support level. We opt for a sideways bias for the precious metal’s price and supporting our case is the RSI indicator below our chart which currently registers a figure of 50 implying a neutral market sentiment. Yet, the MACD indicator below our chart tends to cast some doubt on our aforementioned bias. Nonetheless, for our sideways bias to continue we would require the commodity’s price to remain confined between the 3235 (S1) support level and the 3350 (R1) resistance line. On the other hand, for a bearish outlook we would require a break below the 3235 (S1) support line with the next possible target for the bears being the 3115 (S2) support level. Lastly, for a bullish outlook we would require a clear break above the 3350 (R1) resistance level with the next possible target for the bulls being the 3500 (R2) resistance line.

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In today’s European session we note the release of the UK’s employment data for March, the Czech Republic’s CPI rates for April, Germany’s ZEW indicators for May. In the American session, we get April’s US CPI rates and later on oil traders may be more interested in the release of the weekly API crude oil inventories figure. On a monetary level, we note that BoE’s Governor Andrew Bailey and Chief Economist Pill are scheduled to speak. In tomorrow’s Asian session, we get New Zealand’s electronic card sales for April, Japan’s corporate goods prices for the same month and Australia’s wage price index for Q1.