- The dollar declined sharply immediately after the release of all worse-than-expected U.S. major macro data, including CPI and its core measure, retail sales for September. However, the greenback bounced back strong and recouped all of its losses in late session.
- The gold continued to rebound and went back above 1300. Whether or not the yellow metal’s rally could sustain will be important to watch.
The forex market traded in a wide range on last Friday 13 October, with dollar index rebounding ahead of U.S. CPI and retail sales before diving as it turned out that the two economic indicators were both worse than expected. The CPI came in at 2.2% (YoY) and its core measure came in at 1.7%, while the retail sales came in at 1.6%, higher than the previous reading, though lower than consensus forecasts. However, the dollar index reversed its short-term decline later and went back to around its opening price, with upside resistance at H4-period EMA60.
The dollar index (DXY) traded in a wide range. Its short term moving averages was attempting to cross above its long term moving averages which tended to turn higher after significant contraction. Whether or not the rally could clear its short-term hurdle around EMA200 will be interesting to watch.
（DXY H1 chart）
Turning focus on non-U.S. currencies, the euro turned lower after failure to sustain its rally in early U.S. session trading and settled lower Friday. The shared currency fell further in a choppy early Asian session, targeting downside support at circa H4-period EMA60. Friday, the British pound’s sharp rally which showed on Thursday slowed down a bit above its H1-period EMA30. Keep an eye on the support at H1-period EMA30. The Aussie dollar outperformed other majors and bounced back sharply to close higher. But, the commodity currency inched lower this morning, keeping an eye on its corrective decline in the short term and downside supports showed on its 1 hour and 4 hour charts.
（AUD/USD H4 chart）
As to precious metals, the gold has retreated in European session. However, with solid support on its H1-period EMA60 the yellow metal resumed its uptrend on the back of bearish U.S. inflation by the end of day. Its short term moving averages turned higher with strong bullish momentum after holding above its still-rising-and-diverging long term moving averages again. The short-term upside resistance and downside support to watch rest at 1308.9 and 1297.5 respectively.
（Gold H1 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.