Inflation boosts US dollar

The US inflation data spurred a sharp rise in US yields across the curve, a selloff by equities, and in turn, a haven-derived rush into US dollar. The dollar index tore through resistance at 104.00 on its way to a 0.85% gain to 104.18 on Friday, rising another 0.26% to 104.46 in Asia. The index looks to have formed a medium-term low now as the reality of monetary policy divergence permeates the financial world. The dollar index will now have 105.00 in its sights with support at 104.00 and 103.00.



EUR/USD slumped on Friday, carving through support at 1.0600, almost reaching my 1.0500 targets for this week. It finished 0.93% lower at 1.0520 and has fallen another 0.30% to 1.0490 in Asia. With the ECB only likely to hike a total of 0.50% by September, with the Fed likely to have booked 1.50% of hikes by then, it is no surprise that the single currency has resumed its selloff. The fact that EUR/USD never seriously attempted to regain its multi-decade breakout around 1.0800 suggests that a medium-term high is now in place. Weekend developments in Ukraine were not good news either, and that is likely to further sap sentiment. EUR/USD has resistance at 1.0610 initially, with support at 1.0460.



Sterling fell by 1.43% to 1.2320 on Friday on widening yield expectations from the BOE and the Fed. In Asia, GBP/USD has fallen another 0.23% to 1.2290. Resistance is distant at 1.2425, while a retest of the May lows around 1.2150 has become a distinct possibility.

https://www.fxmag.com/forex/haven-buying-lifts-the-us-dollar-oanda