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US dollar rebounds after July inflation matches expectations
Annual CPI fell to 3.4% from 3.5%, but the report was not seen as enough to materially shift expectations for imminent Fed easing.
The US dollar strengthened versus commodity-linked currencies after the release of July US inflation data, according to Action Forex. The annual Consumer Price Index came in at 3.4%, matching forecasts and easing from 3.5%, while prices rose 0.1% month over month.
Core inflation also tracked expectations at 0.2% month over month and 2.5% year over year. Action Forex said the report did not deliver an additional disinflation surprise, leaving market expectations for an imminent shift in monetary policy largely unchanged even as the dollar recovered some earlier losses.
In USD/CAD, the outlet flagged a bullish engulfing pattern after price tested support near 1.3900, pointing to a potential move higher toward 1.3980 to 1.4000. It also noted that a break below the previous day’s low could revive the downtrend, with targets in the 1.3770 to 1.3840 area.
For AUD/USD, Action Forex said buyers tried to push through resistance near 0.7100 but failed, leading to a sharp retreat and a doji pattern. The outlet said that doji near resistance suggests buyer indecision and raises the odds of a corrective decline toward 0.7020 to 0.7040, with a firm break and close above 0.7100 needed to invalidate the bearish setup.
The outlet added that follow on data, including US producer-price and labour-market releases, could determine whether the dollar’s recovery extends or fades. It said stronger figures could support the dollar further, while weaker data could revive expectations of a more dovish Fed.