Easing U.S. Consumer Prices Contradicts Bullish Dollar Technical Outlook

Daily Forex Technicals | Written by DailyFX | Nov 19 08 07:12 GMT |

Fundamental Outlook Inflation in the U.S. is expected to have eased in October to 4.1% from 4.9%, as oil prices have dropped 60% from their peak. If yesterday's record drop in producer prices is any indication then we may see a similar reduction in the headline inflation number, but an increase in core prices. Traditionally easing prices are bearish for the dollar as they beget lower interest rates. However, since the Fed is already anticipated to lower rates to .50% at their next meeting the anticipated increase in consumer purchasing power may create bullish dollar momentum. If that is the case then it would validate the bullish technical outlook for the dollar which is calling for the EUR/USD to fall below 1.2300. Additionally, a rise in core prices could be enough to keep the central bank on hold adding to the bullish dollar story. The euro / dollar trend is down as long as price is below channel resistance and 1.2861 specifically. Still, until a break of the large range (1.30-1.23) that has held since late October, confidence in directionality is low. For now, I am sticking with the triangle count (4th wave complete). DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.