EUR/USD, GBP/USD and AUD/USD hit hard after US core CPI rise
US dollar strength returns, with a rise in US Core CPI driving EUR/USD, GBP/USD and AUD/USD lower once again.
EUR/USD reverses lower after US CPI release
EUR/USD has been hit hard in the wake of the US consumer price index (CPI) inflation reading, with particular attention being placed upon the core figure of 6.3% (up from 5.9%).
While monetary policy can have little impact upon energy prices, there is a feeling that it will be needed to help drive down the other areas of inflation that continue to surge higher according to this latest reading. The sharp selling pressure within global markets, coupled with renewed confidence of a 75-basis point (bp) hike from the Federal Reserve (Fed) brings expectation of dollar strength moving forward.
The daily chart highlights a very clear trend, with the price reversing lower from trendline and Fibonacci (61.8%) resistance around $1.0176. That looks to spark a continuation of the downtrend that dominated 2022, with fresh lows looking likely before long. A push up through the $1.0369 level would be required to negate that wider bearish outlook.
GBP/USD downtrend kicking back into play
GBP/USD has been attempting to regain lost ground over the course of Friday and Monday’s sessions, with the price rising back up through the $1.17 level.
Notably, that rebound took shape from the crucial long-term support level of $1.1411, which is taken from the 2020 March low. Nonetheless, the bearish trend remains dominant despite this long-term support level, with the price having turned lower from the near-term 61.8% Fibonacci resistance level.
As such, another challenge of the $1.1411 level looks likely, with a break below that point needed to bring heightened expectations of a bearish continuation for GBP/USD.
AUD/USD head and shoulders breakdown continues after recent retracement
AUD/USD has similarly been hit hard over the past 24-hours, with the price reversing lower from the deep Fibonacci zone of $0.6891 to $0.6936.
The wider trend, coupled with the complete head and shoulders formation brings expectations of further downside for this pair.
That provided confidence that this recent rebound was likely to fail, and the US CPI has proven the catalyst for that move. To the downside, key support comes in the form of the $0.6681 to $0.6699 zone. A break below that region looks likely, with a bearish outlook holding unless we see the price break through the $0.7009 level.
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