Appetite Softens Ahead of the US Inflation Data

DOLLAR GAINS, EQUITIES PULL BACK, AS INVESTORS TURN CAUTIOUS AHEAD OF THE US CPIS

The US dollar traded higher against all but two of the other major currencies on Thursday and during the Asian session Friday. It underperformed only versus JPY and GBP, while it gained the most against AUD, NZD, and CAD.

DJIA — TECHNICAL OUTLOOK

The Dow Jones Industrial Average cash index traded in a consolidative manner yesterday, staying between the key support of 35600 and the resistance of 35960, marked by the high of November 25th. That said, it remains above the upside support line drawn from the low of December 1st, and that’s why we will still consider the short-term picture to be positive, even if we see some further retreat today after the US CPIs.

EUR/USD — TECHNICAL OUTLOOK

EUR/USD traded lower yesterday, after it hit resistance slightly above the 1.1347 hurdle. Overall, the pair remains within the sideways range that’s been in place since November 26th, between 1.1260 and 1.1375, but in the bigger picture, it continues to trade below a downside resistance line drawn from the peak of May 25th. Thus, we see more chances for a downside exit, rather than an upside, from the sideways range.

AS FOR THE REST OF TODAY’S EVENTS

During the European morning, we already got the UK monthly GDP for October, alongside the industrial and manufacturing production rates for the month, all of which disappointed. Although the pound did not react much at the time of the release, this, combined with concerns that the new measures imposed by Prime Minister Boris Johnson could hamper the economy more, may convince more participants to take off the table bets with regards to a December hike by the BoE.

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