• The US Dollar was undermined by CPI and lower Treasury yields
  • China CPI sunk in April as central bank pivots move into the conversation
  • All eyes are on the BoE today but ECB members might also have something to say

The US Dollar slid lower overnight after headline CPI printed at 4.9% year-on-year to the end of April instead of the 5.0% estimated and prior. Core CPI was in line with forecasts for the same period, coming in at 5.6%.

Rates markets have doubled down on bets that the Fed will be cutting its target rate by the end of the year. Futures and overnight index swaps (OIS) markets see almost 25 basis points (bp) shaved off monetary policy at the September Federal Open Market Committee (FOMC) meeting.

Treasury yields are lower across the yield curve from this time yesterday with the benchmark 2-year bond near 3.90%. It should be noted though that yields at all tenors are still comfortably above where they were in March post the collapse of SVB Financial.

GBP/USD continues to linger near the 12-month high of 1.2680 seen yesterday with the Bank of England (BoE) rate decision today. A Bloomberg survey of economists is forecasting a 25 bp lift to 4.50%.

Japan’s current account surplus was abeat at ¥ 2,947 billion for March rather than the ¥ 2,278 anticipated. USD/JPY is little changed neat 134.25 at the time of going to print.

Gold and crude oil have eked out small gains so far today on the wea USD and APAC equity indices have seen a fairly stagnant day of trading.

A plethora of ECB speakers will be crossing the wires as well as the Fed’s Kashkari and Waller.


EUR/USD appears to be precariously placed just above several potential support levels.

The 1.0910 – 1.0945 area has many breakpoints and prior lows as well as an ascending trend line. A clean break below this zone might see bearish momentum unfold.

If a sharp move below there were to evolve soon, the price would also go below the lower band of the 21-day simple moving average (SMA) based Bollinger Band. This might indicate a volatility breakout.

On the topside, resistance might be offered at the previous peaks in the 1.1075 – 1.1100 area.