As the North American session gets underway, the US dollar is trading higher against the major currency pairs. In the video, I take a technical look at the roadmap for the three major pairs — EURUSD, USDJPY, and GBPUSD — as traders position ahead of the key US CPI report at 8:30 AM ET.
The dollar is currently higher by 0.36% versus the euro, 0.27% against the Japanese yen, and 0.62% versus the British pound. The stronger dollar tone comes as traders balance rising geopolitical tensions, higher oil prices, and expectations for inflation data that could influence the Fed outlook going forward.
For the CPI report, expectations are for core CPI ex-food and energy to rise by 0.3% month-over-month, while the headline reading is expected to increase by 0.6%, largely due to the sharp rise in energy prices. On a year-over-year basis, forecasts are for core CPI at 2.7% and headline inflation at 3.7%. The data will be a key catalyst for yields, the dollar, and overall risk sentiment.
Fundamentally, markets remain focused on developments surrounding the war in Iran after President Trump rejected Iran’s response to a proposed ceasefire agreement, calling the response unacceptable and signaling frustration with the negotiations. At the same time, President Trump is scheduled to travel to China tomorrow with a delegation of business leaders for meetings with President Xi, adding another major geopolitical event for markets to digest.
In the UK, political uncertainty is also weighing on the pound, with reports that more than 80 MPs are calling for Prime Minister Starmer to step down following recent political setbacks.
In other markets, crude oil prices continue to move higher, with WTI crude futures up $3.27, or 3.33%, at $101.37 as traders price in ongoing Middle East supply risks. Gold is lower by $28, or -0.59%, at $4,704, while silver is giving back part of yesterday’s sharp rally, down $2.32, or -2.70%, at $83.78.
Meanwhile, Bitcoin is trading back near the $80,000 level at $80,700 after failing to extend above its 200-day moving average — the green line on the chart below — during the recent rally attempt. The inability to break and stay above that key technical level keeps the broader bullish bias in check for now.
US stocks are lower in pre-market trading with the S&P down -29 points and the Dow down -50 points and the NASDAQ index down -260 points.
US yields are trading higher with the two-year up 3.8 basis points at 3.985%. The ten-year is now up 2.5 basis points at 4.436%. The U.S. Treasury will optional tenure notes at 1 PM ET. The three year note auction yesterday did not go very well with tepid demand from domestic buyers.