Inflation in the United States once again exceeded expectations, causing markets to further underestimate the possibility of a new easing cycle starting in June.
Alex Kuptsikevich, a senior analyst at FxPro, pointed out: The U.S. dollar rose 1% against a basket of major currencies, bringing the DXY value back to 104.80. The dollar reached peaks close to these levels at the end of February and March, and has not steadily increased since November.
Both the overall and core consumer price indices rose by 0.4%, while the expected increase was 0.3%. The general annual inflation rate rose to 3.5%, while the core index still maintained a year-over-year increase of 3.8%. In both cases, the monthly growth rate did not return to the targeted 2% expectation.
In addition to the strong jobs report from late last week, this should be a concerning message. It is unlikely that the Federal Reserve, linked to this data, will overlook the past five days’ data set and may maintain its wait-and-see stance.
Technically speaking, the current upward momentum appears to be an attempt to break away from the support level at the intersection of the 50-day and 200-day moving averages and continue to rise after a long period of consolidation. This fluctuation may not encounter any significant resistance until the 106.80-107 area last October, where a downward reversal was formed.
