Author – Mr.Amar – Technical Analysts

The US Dollar Index (DXY) rebounded sharply from 97.72 on Thursday and is trading above 98.50 as US inflation levels surge. The US Bureau of Labor Statistics estimates 7.9%, but well above the previous record of 7.5%. This has significantly increased the likelihood of aggressive and restrictive monetary policy from the Federal Reserve. It is worth noting that the 7.9% figure for US CPI is for February and is not multiplied by high oil prices. Oil prices have mostly pulled back from multi-year highs but are still nearly 10% higher in March. Black gold is the backbone for every moment in men, materials and machines. Therefore, black gold’s multiplier effect will force the Fed to resort to a 50-basis point (bps) hike in rate decisions.

As inflation rises, market participants turn their attention to March inflation which could see a massive spike in the CPI figure as fuel hits $139/barrel. The dollar’s reaction has been understandably muted. Price action preceded the print, reacting to a more aggressive ECB stance on tapering and now appears to be closing the gap. However, due to the Ukraine crisis, USD movements are likely to slow down. and then by monetary policy developments next week. Major event that would happen later today would be Michigan Consumer Sentiment Index by the University of Michigan that would move the prices.