US CPI day finally arrives

Next 24 hours: It's CPI time

Today’s report: US CPI day finally arrives

The day has arrived. It feels like the market has been waiting for today’s economic calendar for some time, and later today, we’ll get an indication when US CPI data is released.

Wake-up call

Chart talk: Technical & fundamental highlights

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EURUSD – technical overview

A break back above important resistance at 1.0200 suggests the market could be in the process of carving out a longer-term base after sinking to a multi-year low. Look for any setbacks to now be well supported ahead of 0.9900, with only a break back below 0.9730 to compromise the shifting outlook. Next key resistance comes in by previous support at 1.0635.

  • R2 1.0615 – 27 June high – Strong
  • R1 1.0595 - 5 December high – Medium
  • S1 1.0290 - 30 November low – Medium
  • S2 1.0223 – 21 November high – Strong

EURUSD – fundamental overview

The Euro has been mostly bid of late, though activity has slowed down in recent sessions as the market readies for a major round of event risk starting with today's first-tier economic data and then leading into ECB and Fed decisions later in the week. Looking ahead, key standouts on today’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, and US CPI.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September. The latest weekly close back above the September high at 1.1739 strengthens this prospect. Any setbacks should now be well supported ahead of 1.1100. Next key resistance comes in at 1.2407.

  • R2 1.2407– 16 June high – Strong
  • R1 1.2345 – 5 December high – Medium
  • S1 1.2134 – 2 December low – Medium
  • S2 1.1900 – 30 November low – Medium

GBPUSD – fundamental overview

UK data out Monday showed a 2.1% fall in the Rightmove House Price index for December, which is the indicator's largest monthly fall since August 2018. Meanwhile GDP for October rebounded by a better than expected 0.5% compared to the 0.6% contraction in September. However the figures showed that the UK economy shrank by 0.3% in the three months to October, its worst reading since March 2021. Looking ahead, key standouts on today’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, and US CPI.

USDJPY – technical overview

Longer-term technical studies are in the process of unwinding from severe overbought readings. Look for additional corrective price action back down towards the 130.00 area before the market considers the possibility of uptrend resumption. Rallies should now be well capped ahead of 140.00.

  • R2 139.90 – 30 November high – Strong
  • R1 138.11 – 1 December high – Medium
  • S1 133.62 – 2 December low – Medium
  • S2 133.00 – Figure – Medium

USDJPY – fundamental overview

On Monday, Bank of Japan board member Hajime Takata told the Nikkei newspaper it's not time to end yield curve control. On the data front, Japanese economic data were mixed with PPI higher than estimates while Q4 business expectations were mixed. Looking ahead, key standouts on today’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, and US CPI.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base following the recent surge back above 0.6500. The latest weekly close back above previous support now turned resistance at 0.6682 strengthens the outlook for a bullish structural shift.

  • R1 0.6917 – 13 September high – Strong
  • R2 0.6852 – 5 December high – Medium
  • S1 0.6585 – 21 November low – Medium
  • S2 0.6387 – 10 November low – Strong

AUDUSD – fundamental overview

Aussie consumer confidence data has come out early Tuesday and is being digested. Mostly however, the focus remains on bigger picture themes in the space. Looking ahead, key standouts on today’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, and US CPI.

USDCAD – technical overview

A recent surge back above 1.3000 signals an end to a period of bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3700 – Figure – Medium
  • R1 1.3676 – 6 December high – Medium
  • S1 1.3381 – 28 November low – Medium
  • S2 1.3316 – 24 November low – Strong

USDCAD – fundamental overview

The Canadian Dollar has really taken its hit of late and has been a clear underperformer. That being said, we did see mild demand on Monday, this on the back of a recovery in the price of oil and Bank of Canada Macklem comments that raising rates too little was the greater risk. Looking ahead, key standouts on today’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, and US CPI.

NZDUSD – technical overview

Overall pressure remains on the downside with risk for the current recovery rally to stall out and form a lower top for the next major downside extension. A break back above 0.6469 would be required to take the immediate pressure off the downside.

  • R2 0.6469 – 12 August high – Strong
  • R1 0.6443 – 5 December high – Medium
  • S1 0.6285– 1 December low – Medium
  • S2 0.6156 – 28 November low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar took a bit of a hit on Monday, partially getting weighed down on the 36.1% decline in November New Zealand home sales. Looking ahead, key standouts on today’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, and US CPI.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4300 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in at 3492.

  • R2 4150 – 13 September high – Strong
  • R1 4105 – 1 December high – Strong
  • S1 3863 – 8 November high – Medium
  • S2 3699 – 3 November low – Strong

US SPX 500 – fundamental overview

We've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy that risks potential recession in the months ahead. Overall, we expect inflation to continue to be a problem in Q4 2022 and Q1 2023 that results in downside pressure into rallies.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. This latest break back above 1808 strengthens the bullish outlook.

  • R2 1880 – 13 June high – Strong
  • R1 1811 – 5 December high – Medium
  • S1 1719 – 23 November low – Medium
  • S2 1665 – 8 November low – Medium

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Peformance chart: 30 Day Performance vs. US dollar (%)

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