US DOLLAR INDEX LOSES MOMENTUM AHEAD OF INFLATION DATA

The momentum in Wall Street extended on Wednesday as investors reacted to strong quarterly results by companies like CVS, CME, and Chipotle Mexican Grill. In general, while companies like PayPal, Meta Platforms, and JP Morgan disappointed, the earnings season has been relatively strong. According to FactSet, companies are set to report earnings growth of over 20% for the fourth straight quarter. Some of the other companies that will publish their results today are Coca-Cola, PepsiCo, Duke Energy, Piper Sandler, and Twitter.

The price of crude oil tilted higher after the latest American inventories data. According to the Energy Information Administration (EIA), the overall inventories declined by more than 4.75 million last week. That decline was higher than the median estimate of an increase of 369k. It was also higher than the previous 1 million barrels. Other data showed that the US imported more than 1.4 million barrels of oil per day last week while the inventories at Cushing rose to more than 2.8 million barrels. Prices rose as the escalation between western countries and Russia continued.

The economic calendar will have several important events today. The most important one will be the latest American consumer price index data. Analysts expect the data to show that the headline CPI rose to 7.3% while the core CPI rose to 5.9%. These numbers are important because they are part of Fed’s dual mandate. The US will also publish the latest initial jobless claims numbers. Elsewhere, the Indian and Swedish central banks will deliver their rate decisions.

XAUUSD

The XAUUSD pair has been in a bullish trend in the past few days. The pair is trading at 1,830, which is the highest it has been since January 26th. The pair has moved to the 23.6% Fibonacci retracement level. It has also risen above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the overbought level. Therefore, the pair will likely keep rising ahead of the American CPI data.

EURJPY

The EURJPY strong rebound has paused in the past few days as investors assess the ongoing divergence between the BOJ and the ECB. On the four-hour chart, the pair has formed a bullish flag pattern. It has also moved between the upper and middle lines of the Bollinger Bands. Also, the price has moved slightly above the 25-day moving average. Therefore, the pair will likely have a bullish breakout soon.

EURUSD

The EURUSD pair rose slightly ahead of the upcoming American consumer inflation data. It is trading at 1.1435, which is slightly above the upper side of the bullish flag pattern. It has also moved above the 25-day moving average while the Relative Strength Index (RSI) has moved slightly below the overbought level. Therefore, the pair will likely break out higher in the coming days since it has formed a cup and handle pattern.