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Investors are betting on a stronger US dollar following Tuesday’s inflation figure. Specifically, US’s CPI rose to 2.8% in May compared to 2.4% in April. This raises expectations of more rate hikes in the futures.
One factor driving US inflation could be the sustained rise in crude oil prices.
Against Sterling, the FX rate dropped to near 1.330 at the time of writing. Earlier this week we mentioned softness in Sterling due to economic weakness in the UK. We expect a re-test of the May’s low at 1.320.
Against the Japanese Yen, the rate looks like it is reasserting its intermediate uptrend from 105.0 The pattern of rising lows suggests a potential breakout above the 111.0 peak (see Featured Chart).
For USDEUR, the near-term resistance at 1.180 is pausing Euro’s recovery.
Overall, it appears USD’s strength is gathering momentum.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.