US CPI Anticipating: Impact on Gold, EUR/USD and Nasdaq 100

The U.S. Bureau of Labor Statistics set to unveil the US CPI consumer price index figures on Tuesday morning. Taking into account the Fed’s increased interest in incoming data and its awareness of potential inflationary pressures. As the financial markets poised to assign significant importance to the upcoming CPI report. This heightened significance may lead to increased volatility in the upcoming trading sessions, especially affecting gold prices, EUR/USD, and the Nasdaq 100.

Regarding projections, the headline CPI anticipated to demonstrate a 0.1% increase on a seasonally adjusted basis for October. This would result in a decrease in the annual rate from 3.7% to 3.3%. Simultaneously, the core CPI, excluding food and energy, anticipated to rise by 0.3% on a monthly basis. With the 12-month reading remaining steady at 4.1%.

Federal Reserve’s Data-Centric Caution and Policy Outlook: Insights from Chair Powell

The Federal Reserve has adopted a data-centric approach and emphasized a cautious stance, committing to proceed carefully. Despite the cautious approach, Chair Powell has hinted that the Fed has not ruled out the potential for further policy adjustments. Powell has expressed uncertainty about achieving a sufficiently restrictive stance to bring inflation back to the 2.0% target. Also highlighting that progress in cooling price pressures not guaranteed.

Powell’s statements suggest that the Federal Open Market Committee (FOMC) is not on a predetermined path. It is also prepared to respond appropriately to unexpected challenges that may hinder the implementation of its mandates. Consequently, any deviation of the October CPI figures from consensus expectations could influence policymakers to consider another rate hike in upcoming meetings.

Also Read: US Dollar Fate Tied to US Inflation, Overview on Currencies

US CPI Influence: Shifting Rates and Market Impact

If a strong US CPI report changes interest rate expectations towards a more hawkish outlook, US yields are expected to rise, thereby strengthening the U.S. dollar. This, in turn, may exert downward pressure on gold, the Nasdaq 100, and EUR/USD. Conversely, a downside surprise in last month’s inflation data could support precious metals, tech stocks, and the EUR/USD by constraining yields and challenging the argument for higher interest rates in the long term.

Anticipating US CPI Gold’s Recent Trend Reversal

Gold saw a reversal in its trend earlier this month. Facing difficulties to get over the range of $2,010 to $2,015. Following this retracement, the metal is currently situated around the 200-day simple moving average, fluctuating in close proximity. If prices manage to break above and solidify their position beyond this technical indicator. As the initial resistance is noted at $1,980, with a subsequent level at $2,010/$2,015.

Conversely, if sellers reemerge, renewing downward pressure, the initial support to monitor lies at $1,935. Just above the 50-day simple moving average. Although gold may find support in this zone during a retracement, a breach to the downside could trigger a decline towards $1,920. If the price falls below this point, attention will then shift to the $1,900 level.

EUR/USD: Support at 1.0650, Resistance at 1.0765 – Potential Rally to 1.0840

After facing resistance at the 1.0765 Fibonacci level. EUR/USD has retreated, and current prices are hovering just above the lower boundary of a support range around 1.0650. It is imperative for the bulls to uphold this support; failure to do so may lead to the exchange rate declining towards trendline support at 1.0555. Persistent weakness increases the likelihood of revisiting the 2023 lows.

Turning attention to a more optimistic scenario, if sentiment experiences a sustained upturn and the bulls regain control in the market, initial resistance is found at 1.0765. This level aligns with the convergence of the 200-day simple moving average and the 38.2% Fibonacci retracement of the July/October downturn. If managed to pass this resistance level, there is a potential moment to open the path for a rally towards 1.0840.

US CPI Influence: Nasdaq 100 Update

Last week, the Nasdaq 100 saw an upward breakout, surpassing the clustered resistance between 15,400 and 15,500. Should this breakout endure and the tech index continue to stay above this range, now functioning as technical support, there is the potential for an upward movement towards the September high at 15,720. Further strength would then shift the focus to the 2023 peak at 16,062.

Conversely, if sellers reappear and bullish investors start unwinding their long positions to secure profits amid concerns of a potential correction following the recent bullish trend, the initial support situated at 15,500/15,400. Should this support level give way, we might observe a retracement towards 15,200, followed by 14,850. Prolonged weakness increases the the chance of a drop towards 14,600.