The USD Index has shed off some weight this Tuesday following the release of the US Consumer Price Index data.
According to data released by the Bureau of Labor Statistics, Consumer Price Index rose 0.6% monthly in March, which surpassed the previous number (0.4%) and the market expectation of 0.5%. The core component of the report (CPI ex-food and energy prices) rose 0.3% monthly, beating the previous number of 0.1% and the market expectation of 0.2%.
The headline CPI number rose 2.6% on an annualized basis before seasonal adjustment, beating the expectation of an annualized growth of 2.5% from March 2020. The CPI number is the largest growth in monthly inflation reported since August 2012, returning the pace of inflation to pre-pandemic levels. However, the USD Index reacted negatively to the report, shedding of the earlier gains of the day and now trading 0.02% lower.
The USD Index (DXY) is responding more to the drop in the 10-year US Treasury Note, which has also shed off earlier gains of the day and is now trading at 0.02% less than its opening price.
Technical Outlook for USD Index
Today’s decline has been arrested at the 4-day support level of 92.009, which is the former neckline of the 12 March/18 March double bottom on the daily chart. If this price level is taken out, then bears could aim for 91.500, with 91.261 and 90.965 serving as additional targets to the south.
On the flip side, a bounce off this support allows the bulls to aim for the 92.50 resistance barrier, which stands between the bulls and 6-day highs at 92.803. Restoration of the uptrend on the DXY depends on price breaching 92.803 and 93.173, along with the 2021 high at 93.437.