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FOREX: Very Limited Greenback Reaction as Fed Rate Cut Bets Modestly Trimmed

FOREX
  • Currency market adjustments remain limited following the US CPI data with the most interesting moves highlighted by an impressive 100 pip swing for USDJPY. After remaining close to pre-data levels, the USD index is back at session lows as the most recent greenback trend extends despite Fed rate cut bets for September being modestly trimmed.
  • EURUSD resistance at 1.1008, the Aug 5 high, has been cleared and this confirms a resumption of the uptrend. Immediate sights are on 1.1046, the Jan 2 high, ahead of 1.1084, the Dec 29 ‘23 high. Note moving average studies remain in a bull-mode set-up, highlighting a rising trend.
  • Higher core yields are also weighing on the yen at the margin, providing a solid 0.68% boost for EURJPY. A continuation of the latest recovery - a correction - would allow the oversold set-up to unwind. Initial firm resistance is 163.74, the 20-day EMA.
  • GBP and NZD remain underperformers on the session following the lower-than-expected UK CPI and the dovish 25bp rate cut from the RBNZ. Despite the small dip for cable, price remains above the 20-day EMA and a continuation higher would highlight a stronger trend reversal and signal scope for a climb towards 1.2955, a Fibonacci retracement.
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