US Dollar on Defense Before Key US CPI Data – Setups on EUR/USD & USD/JPY

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Wednesday's U.S. inflation report will be the focus of market attention. An acceleration in price pressures should be bullish for the U.S. dollar, while a downside surprise in the data should be bearish.

Consensus forecasts predict a 0.3% monthly increase in headline CPI, lifting the 12-month reading to 3.4% from 3.2% previously. The core CPI is also expected to rise 0.3% on a seasonally adjusted basis, though the annual rate is projected to slow slightly to 3.7%, a small step in the right direction.'s policy path has not materially changed, meaning 75 basis points of easing is still possible for this year. These remarks appear to have played against the greenback in recent days.

Taking everything into account, if the inflation outlook continues to deteriorate, the FOMC might find itself compelled to adopt a more hawkish position. With the labor market displaying remarkable strength, policymakers have sufficient leeway to exercise caution before moving towards a looser policy stance.Traders should closely watch the upcoming CPI numbers and brace for potential volatility. That said, if the data surprises to the upside, U.S.

Traders seeking guidance on the pair’s near-term prospects are advised to monitor resistance at 152.00 and support at 150.90 attentively. Conversely, if prices pivot lower and a breakdown eventually takes place, sellers might be enticed to re-enter the market, paving the way for a slide towards the 50-day simple moving average near 149.80. On further weakness, channel support at 148.80 would be the next area of interest.Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.

 

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