The US Dollar remains on the backfoot with the latest move lower exacerbated by yesterday’s CPI report., anything short of a sizeable upside surprise in inflation would mark a disappointment for the USD. Therefore, while the CPI report was confirmed at 7%, highest since June 1982, it was however in-line with analyst estimates. It is important to remember that when trading economic data, the most important thing is how it compares to the consensus, given that the consensus is what is priced in.
Hence, why a near four decade high inflation reading resulted in a softer USD, as there was no fresh incentive to increase long exposure, particularly where many had been leaning for a higher than expected reading.That said, the combination of a softer USD and an unwind of short GBP positions has seen Cable towards its 200DMA, with the pair now its most overbought since February 2021.
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