US dollar waits in the woods ahead of US inflation report

Posted 13 March, 2018

Currency trading was mainly sluggish yesterday, though US dollar weakened vs the rivals on weak wage growth data in the February labor report. During the morning session, the greenback attempted to turn the table, but the market shows quite moderate development given the upcoming release of the US inflation report to be released later in this day, which will set the pace for further US dollar movement in the market.

According to the market analyst, the market mostly expects that consumer prices will post slower growth at 0.2% (0.5% in January) due to cheaper petroleum. The late-March rate increase by the Federal Reserve has been fully included in the prices already now, though today's report is unlikely to affect the expectations even in case of lower figures, as sources commented. At the same time, the data can have an influence on the forecasts of 4-time rate revision this year. Still, it is necessary to take into account that the Federal Reserve pays main attention to PCE rather than CPI.

As a result, the US dollar is said to have small chance to hike after the report, unless CPI will surprise everyone in the market posting another high-pace strengthening. Moreover, a bullish potential of the greenback will still be restrained by trade war fears that persist in the markets despite softer import duty position of the US President.

The EUR-USD pair remains within tight range waiting for expansion after the US reports. Euro reportedly cannot go up due to 20-day moving average that is said to prevent the price from exceeding 1.2350 handle. However, the barrier will remain strong for a near-term in case of the US inflation to be at 0.2% or higher.

Previous forecast

13 March, 2018 15:16

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Next forecast

12 March, 2018 16:07

European currencies prepare for higher-pace volatility →

Currency markets have been slow on Monday. The major currencies are staying sideways amid slack trading and no serious boost. However, European currencies should be ready for the results of the events that will take place in the next few weeks, as the markets can become more active afterward. Euro and sterling are reportedly getting firmer after sluggish dynamics last Friday.

European currencies prepare for higher-pace volatility
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