US Inflation Data Takes Center Stage

RISK AVERSION CONTINUES IN LIGHT OF THE US CPIS

The US dollar traded higher against all but one of the other G10 currencies on Tuesday and during the Asian session Wednesday. It advanced the most versus CHF, NZD, and AUD, while eked out the least gains against GBP and SEK. The greenback was found virtually unchanged against JPY.

S&P 500 — TECHNICAL OUTLOOK

The S&P 500 continues to slide, after hitting the all-time high on Monday, at 4244. Even if the decline continues, we might still consider this move lower as a temporary correction if the price remains above a medium-term tentative upside support line taken from the low of October 30th. For now, we will take a cautiously-bullish approach.

USD/JPY — TECHNICAL OUTLOOK

The 108.35 hurdle, which is marked near the lows of May 7th and 11th, continues to hold the USD/JPY from moving lower. That said, the pair is still forming lower highs, while trading below a short-term downside resistance line taken from the high of May 3rd. There is a slight indication that we might see further declines, however, a break below the 108.35 zone would be needed first. Hence our cautiously-bearish approach for now.

AS FOR THE REST OF TODAY’S EVENTS

During the early European morning, we already got the UK GDP data for Q1. It was revealed that the UK economy contracted by less than anticipated during the first three months of 2021, but as we have been anticipating, the mom rate for March showed decent expansion. The industrial and manufacturing production rates for the month were also higher than expected.

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