Red Hot U.S. Inflation Spurs Massive Dollar Gains

November 15, 2021

Red Hot U.S. Splashines Spurs Massive Dollar Gains

The US Dollar has been on a tear since last Wednesday when Consumer Price Indexes showed that inflation in the U.S. climbed to its highest level in 30 years. The CPI surged 6.2% from a each year perspective (0.9% month over month), brpinging inflation to levels last seen in December 1990, while the Core CPI increased 4.6% compared to last October, making it the biggest gain since August 1991.

The US Dollar bill Index (DXY) rose to a 16-calendar month gamy before winning a modest breathing tim, while EUR/USD born below 1.1500 suffer, reaching a low of 1.1433 at press clock. A epic part of the drop is attributed to billowing U.S. inflation and on top off of that, the Euro is still affected aside the belief that the European Central Bank will lag behind its major counterparts such as the Fed and the Cant of England in price of rate hikes.

Key Events for the Week Ahead

Monday is a slow day, with the only noteworthy unloosen being the Empire State Manufacturing Index that is regular for give up at 1:30 pm GMT. This is a survey of manufacturers from the New York City area and acts as a leading index of economic health; however, its impact tends to be down-to-sensitive peculiarly if the effective phone number comes close to the forecast of 22.1.

The main event of the week will be the release of the U.S. Retail Sales and Core Retail Gross revenue Numbers, scheduled for Tuesday at 1:30 pm GMT. The Core version excludes automobiles from the computing and is thoughtful a smoother gauge of consumer spending trends. Sales made at retail levels account for the biggest part of the whole economic activity, hence the increased importance of these indicators. The Core edition is expected to show a change of 1.0% from last month's 0.8%, while the vanilla version is due to show a 1.2% deepen; numbers above expectations unremarkably strengthen the greenback.

The rest of the week will constitute sprinkled with speeches delivered by Fed members and the head of the ECB, Christine Lagarde. These are considered medium-grandness events but as always, any clues regarding a shift in monetary insurance policy can have a stronger effect on the currency's motion.

Technical Outlook – EUR/USD

The pair is currently trading real close to the long-terminal figure S/R level at 1.1430, after a successful soften of 1.1500 support. Tending the stylish strength exhibited past the US Dollar, the incumbent caprice is likely to take the pair into the lower edge of the diagonal channel seen connected the chart to a lower place, especially if the ECB doesn't change its posture regarding rate hikes.

The MACD is showing bearish impulse (moving lowered, with lines spread apart) and the RSI is not oversold, which shows that the greenback is likely to remain in control for a while. The first barrier is the S/R zone between 1.1430 – 1.1400 and a break would likely bring off in additional Peter Sellers. Potential resistance is located at 1.1500 but as long as that spirit level remains intact, the bias is bearish.