EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts: Dollar Index Surges by Over 0.50% Following Robust US CPI

Key Insights

• The US Dollar Index shows a notable 0.5% surge after strong U.S. CPI data release.
• Shelter costs majorly influenced the inflationary spike, making up over half of the CPI’s increase.
• Despite the CPI growth, real average hourly earnings saw a slight monthly decline.

Robust Inflation Data Shakes Up Forex Markets

In the wake of the recent robust US Consumer Price Index (CPI) data, major currency pairs are in the spotlight. The Dollar Index has witnessed a notable surge of over 0.50%. September’s data reveals that consumer prices rose by a more-than-anticipated 0.4%.

Furthermore, the annual rate of inflation clocked in at 3.7%, outstripping the forecasted 3.6%. While the core CPI adhered precisely to projections, rising 0.3% monthly and 4.1% annually, shelter costs emerged as the primary inflation driver, constituting over half of the CPI’s increase.

However, on the wage front, real average hourly earnings dipped slightly by 0.2% for the month but saw a 0.5% year-over-year uptick. This strong inflation data has reshaped expectations and strategies in the forex market.

U.S. Dollar

On October 12, the U.S. Dollar Index displayed a promising upward trajectory, marking a 0.50% surge, with its value stationed at 106.25. According to the 4-hour chart, the pivot point for the Dollar Index (DXY) stands at 105.43. Resistances are staggered at 106.23, 106.60, and a stronger barricade at 107.01. Meanwhile, key support levels lie at 105.60 and 105.29, and the stronger at 104.80.

Technical indicators reveal an RSI of 57, signalling a bullish sentiment. The DXY portrays a potential upward momentum as it intersects with the 50-day Exponential Moving Average at 106.23.

Chart patterns suggest the Dollar Index is gaining support above 105.600, with a downward channel presenting resistance at 106.25. September’s consumer prices surpassed expectations with a 0.4% rise, driving the inflation increase. The current trend forecasts a bullish sentiment for the U.S. Dollar when above 105.43.

EUR/USD

The EUR/USD pair on October 12 is facing a slip of 0.65%, now trading around 1.0550, as revealed in the 4-hour chart timeframe. The pair’s pivot point stands at 1.0545, hinting at crucial price levels in the immediate future. On the upside, the pair encounters resistances at 1.0642, 1.0698, and 1.0793.

Conversely, downside support is positioned at 1.0490, followed by deeper cushions at 1.0394 and 1.0339. Summing up the technical landscape, the overall trend for EUR/USD appears to be bearish as long as it remains below the 1.05801 mark.

In the short term, market participants should be on the lookout for potential tests of these key resistance levels in the forthcoming trading sessions.

GBP/USD

On October 12, the GBP/USD pair is experiencing downward pressure, shedding 0.66% to settle at around 1.22307, influenced by the recently unveiled robust US CPI metrics. From a technical perspective, as outlined in the 4-hour chart, the pivot point for the pair has been established at 1.2179. Looking upwards, resistances are mapped out at 1.2320, 1.2402, and further up at 1.2546.

On the downside, support levels are seen at 1.2095, trailed by 1.1954 and 1.1872. The Relative Strength Index (RSI) hovers at 48, suggesting a nearly neutral momentum for the pair.

In conclusion, the overall trend for the GBP/USD is tilted bearish as long as the pair remains below the 1.22644 mark. In the short-term, traders might witness the pair aiming for the key resistance levels in the upcoming sessions.

USD/CAD

On October 12, the USD/CAD pair showcased an upbeat momentum, soaring by 0.45% to hover around 1.36456. Analyzing the pair on the 4-hour chart, a critical pivot point stands at 1.3669. As we ascend, the immediate resistance is marked at 1.3776, followed by 1.3895 and a higher barrier at 1.4001. Conversely, the pair finds its immediate support at 1.3555, with subsequent levels at 1.3446 and 1.3331.

The Relative Strength Index (RSI), currently at 46, paints a nearly neutral picture for the pair, indicating a slight lean towards the bearish territory but remaining close to the midpoint.

Conclusively, the overarching sentiment for the USD/CAD remains bullish, especially if the pair remains north of the 1.36171 mark. In the short-term horizon, the market could see the pair challenge and possibly test the designated resistance zones.

USD/JPY

On October 12, the USD/JPY currency pair displays a buoyant momentum, gaining 0.36% to position itself at 149.68. This rise indicates a breakout above the symmetrical triangle pattern seen on the 4-hour chart. A closer look reveals a pivotal point for the pair at 148.94. On the upside, the immediate resistance awaits at 150.54, with further barriers at 151.74 and 153.35. On the flip side, support is found at 147.71, followed by 146.12 and a more pronounced base at 144.89.

The Relative Strength Index (RSI), recorded at 60, leans towards a bullish sentiment as it hovers above the midpoint. In conclusion, the current trajectory for USD/JPY remains bullish, particularly if it sustains above the 149.302 level.

In the short-term, traders should keep an eye on the pair as it might test the forthcoming resistance zones.

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