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Greenback Soars After Large CPI Beat, EURUSD Below 1.15 Level

FOREX
  • The dollar index rose to its best levels since July 2020 following the higher-than-expected CPI data from the US. Currently up just shy of 1%, the DXY may look to target the June 2020 lows, residing at 95.71.
  • Higher US yields and renewed dollar strength prompted a strong reaction in USDJPY after the release. After closing at its lowest levels for 4 weeks yesterday, the pair came roaring back above the 113 handle to briefly trade above 114 before the rally ran out of steam. The trigger for a resumption of the underlying uptrend remains at 114.70, Oct 20 high.
  • In other G10 FX the price action was a little more volatile in the immediate aftermath of the data. EURUSD traded roughly 20 pips lower on the release before reversing 40 points higher to trade at 1.1574. As the dust settled, the dollar garnered broad based support, taking the single currency to fresh yearly lows and beneath the 1.15 level which has previously been technically significant.
  • Elsewhere, AUD and NZD both retreated over half a percent with cable a significant underperformer, dropping around 1% within close proximity to 1.3412, the Sep 29 low and bear trigger.
  • Notable weakness in both SEK and NOK, falling 1.45% and 1.58% respectively against the greenback, with emerging market currencies also taking a plunge. USDZAR sticks out, rising 2.6% with USDMXN also bouncing 1.4% amid the pickup in US yields.
  • Overnight, Australian employment data is scheduled before the UK publishes the first estimate for Q3 GDP. Widely expected to be a subdued afternoon amid market closures with North America out for the Veterans Day holiday.
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