Dollar pairs seemed to have stabilised now, particularly EUR/USD, and USD/CHF which goes someway to confirming my earlier thoughts that the ones moving those pairs are now positioned accordingly.
The market is looking for an unchanged read in the numbers of 2.1% for the headline CPI and 2.0% from the core y/y.
Irrespective of the positioning the market is going to move sharply if we miss either side. A jump of 0.2%+ will see the dollar jump and a lower number by around the same margin will see it fall.
Despite the Fed saying that they are happy to wear inflation temporarily above target the market will still be judgemental and won’t be interested in what the Fed is happy with. We’ve seen from Canada what “temporary” means over there.
Unless it misses by a huge amount USD/JPY is unlikely to go anywhere significant so the focus will be on EUR/USD. If the buyers of USD/CHf get caught out then we could have some very speedy covering going on and EUR/USD will be back above 1.3500 in a blink.
As for USD/CHF, we’re into a previous resistance level and also have the 55 wma at 0.9024. If we do break higher then 0.9065/80 is the next line of resistance.
USD/CHF Weekly chart 22 07 2014