moved out of its narrow trading range during the week after the stronger-than-expected CPI data. The high price reached 0.92887, which was the low of a swing area of January 28 and January 31. That swing area comes between 0.9288 and 0.92937.move above that area would increase the bullish bias and have traders entering the upper end of January 27. to January 31. The highs extended to 0.9328, 0.93368 and 0.93425.
The pair moved back down after the initial run higher, and is now testing a lower swing area between 0.9272 and 0.9279. Going back to early January, there were swing highs in that area. On January 27, when the price moved above that area, it accelerated and on February 1, the price corrected to that level after breaking below. The price has stopped at that area.
So look at that level for temporary intraday support. If the price moves below, we could see a rotation back down to the earlier highs for the week near 0.9261on disappointment. Be aware.
The CPI data continues to move higher, pushing the Fed back further into the corner as it remains slow to react. Will they play catch-up in March with a 50 basis point increase?
Admittedly, the market has tightened its grip on the Fed, but the Fed has not tightened yet, rates are at 0.25% soon. Corporations continue to talk about higher revenues with commodity prices still moving higher. Will they get tired, uf waiting and waiting and waiting for the numbers to start pulling back, despite the fact that the train is still moving away from the station.
The next meeting is not until March 16. It is currently February 10th. Recalling back to old days, numbers like this would have traders on the verge of a rate hike around this time. Those days seem to be behind us as the Fed and other central banks for that matter explore new ways of monetary policy.
See Adam’s posts about the Fed and click inflation HERE and HERE