USD Weakens After US Inflation Data: Trading Opportunities This Week
The forex market saw significant movements this week following the release of US inflation data. The US Dollar Index (DXY) fell below 101.50 for the first time in two weeks, reflecting shifting market sentiment toward Federal Reserve interest rate expectations.
Inflation Data Below Expectations
The US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) for April rose only 0.2% month-over-month, below the market expectation of 0.3%. Annual inflation also declined to 2.8% from 3.1% the previous month. This data reinforces expectations that the Fed may begin cutting interest rates in the second half of the year.
The immediate impact saw the US dollar weaken against most major currencies. EUR/USD surged to 1.0950, GBP/USD reached 1.2720, while USD/JPY fell below 148.00. Gold prices also rallied, breaking above $2,580 per ounce.
Key Levels to Watch
- EUR/USD: Bullish above 1.0900, next resistance at 1.1050
- XAU/USD (Gold): Support at $2,550, resistance at $2,600
- USD/JPY: Bearish bias, support at 147.50
- GBP/USD: Holding above 1.2700, resistance at 1.2850
Open your trading account today and take advantage of these market movements.