January 15, 2025 at 01:08PM
Yesterday was the US PPI. It came in weaker than expectations but showed numbers still higher than the Fed’s target for inflation at 2%. The US CPI is next (will be released at 8:30 AM ET). Below are the estimates.
CPI MoM is expected to show a 0.3% gain vs 0.3% last month.
CPI YoY is expected to come in at 2.9% up from 2.7% last month.
Core CPI MoM is expected to rise by 0.2% vs 0.3% last month.
Core CPI YoY is expected at 3.3%, unchanged vs last month.
If the numbers come out weaker than expected, the normal move is for the USD to move to the downside as yields move lower/stocks higher. If it comes out stronger, I would expect the opposite with yields moving higher/stocks lower and the dollar moves higher.
Traders can have a view but it is what happens after which will give traders more confidence, or tell them, it is time to get out of a losing position. Of course, waiting and reacting after the dust settles is also a possibility for traders.
As a result, it is important to map out the route that may happen with bias-defining levels, targets on where the price will be reaching towards and potentially breaking, and risk levels that will tell traders they are wrong.
In this video above, I look at the 3 major currency pairs – the EURUSD, USDJPY and GBPUSD – from a technical perspective and outline those levels for you so that you know the roadmap and can follow it if the number is stronger (higher dollar) or weaker (lower dollar).
Below are some key levels:
EURUSD. The EURUSD is trading above and below the 200 hour MA at 1.03029 as the market awaits the release and the next shove. Will that be higher or lower?
If lower (stronger than expected CPI),
The 100 hour MA at 1.02669 is the first target.
Move below that level and the lows from yesterday’s trading at 1.02388 is the next target
Below that and the low from Jan 2 at 1.0222 would be eyed
The low from Monday at 1.0176 is the final target.
If higher (weaker than expected CPI:
Swing area between 1.0332 to 1.0343
38.2% retracement of the move down from December high comes in at 1.0349.
Above that an the door opens for more upside probing with a swin area near 1.0373 and 1.0383
50% of moved down from Decemebr at 1.04028. The 50% of the range from 2022 is also near that level at 1.0405.
USDJPY:The USDJPY fell below a cluster of MA today defined by the 100 bar MA on the 4 hour at 157.469, the 200 and 100 hour MAs near 157.73. That tilted the bias to the downside, but the pair remains confined to a larger up and down range. What key levels are in play on the top and bottom sides?
On a stronger number (higher CPI)
Traders will look back to the cluster of MAs are the next target starting with the 100 bar MA on the 4-hour chart at 157.469 and up to 157.73.
Get back above those MAs and 157.91
Then 158.39 (high from yesterday)
158.403 – near other recent swing highs.
The high from Friday after the jobs came in at 158.83
On a weaker number recent swing low levels comes in at:
156.45
156.219
155.94
Move below 155.94 and the pair is outside the low of the range since December 19 and more downside probing can be expected
GBPUSD: The GBPUSD is trading above and below the 100 hour MA at 1.22189. That will be a barometer for traders. Move above is more bullish. Move below is more bearish.
Bullish targets:
38.2% of the recent move down from last week’s high 1.22808
200 hour MA at 1.2333
50% of the same move lower at 1.2337
A move above that, and the 38.2% of the longer term move down from the December high comes in at 1.23689
Bearish targets would start with the swing lows from the last three days. Move below them and the pair is trading at multi year lows. The door is open for more downside probing as the bears keep their strong hold on the market bias:
1.2159
1.2137
1.20989
This article was written by Greg Michalowski at www.forexlive.com.