It looks like the market is trying to push to the downside.
The US dollar fell a bit on Wednesday after initially trying to rally. Furthermore, we broke down below the 5.25 BRL level, which is an area that has been supportive over the last week or so. By breaking down through there and closing towards the bottom of the candlestick, it does suggest that perhaps we have further to go to the downside. If that is going to be the case, the CPI numbers on Thursday are going to be absolutely crucial.
Latin American currencies can give great price movements.
Trade them with our featured broker.
If CPI comes out hotter than anticipated, it could turn this market right back around as people will bank on the Federal Reserve tightening. It should make the US dollar stronger overall. Having said that, the opposite is true as well, as the CPI coming in weaker than anticipated could have people thinking that the Federal Reserve should fill out when it comes to interest rate hikes, perhaps not as aggressive as people had thought. The CPI number gives us an idea as to whether or not inflation is picking up in America, which is by far the biggest question a lot of people have.
I do think that the market is going to continue to be very noisy, but when you look at the emerging market currencies such as the Brazilian real. They are highly sensitive to the interest rates coming out of the United States as the South American powerhouse is a major commodity exporter. If commodities start to spike in price as well, that could cause major problems. As things stand right now though, it looks as if we are trying to form a bit of a “death cross”, when the 50 day EMA breaks down below the 200 day EMA. That is normally a longer-term bearish signal but will have to see because this market is oversold by just about any stretch of the imagination. In a bear market like this you could see a significant snapback, and that catalyst for the move could be the CPI figure. The announcement comes out at 10 AM New York time, so between now and then you should probably just monitor this market, not necessarily put a lot of money into it. That being said, it looks like the market is trying to push to the downside.
Source link
