What Happened
ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner have flagged a potential upside surprise in US Consumer Price Index (CPI) data, forecasting a 0.9% month-on-month headline print against the market consensus of around 0.3%. Core CPI is expected at 0.3% MoM. A hotter CPI reading typically strengthens the US Dollar (USD) as traders price in fewer Federal Reserve rate cuts, while simultaneously weighing on equities and commodities priced in USD.
Key Levels
The US Dollar Index (DXY) is currently trading near 104.20, a key short-term pivot level. Support sits at 103.40 (recent swing low) and 102.80 (February consolidation zone). Resistance is seen at 104.80 (50-day moving average) and 105.50 (multi-week high), which would likely be tested if CPI surprises to the upside.
Technical Picture
The DXY has been consolidating in a 103.40โ104.80 range over the past two weeks, suggesting traders are waiting on the CPI catalyst. The 50-day moving average at 104.80 is acting as near-term resistance. RSI sits around 52 โ neutral territory โ meaning there is room to push higher or lower depending on the data outcome. A break above 104.80 would shift the short-term trend back to bullish.
What Traders Are Watching
All eyes are on the CPI release. A print at or above 0.9% MoM as ING forecasts would likely push DXY toward 105.50, pressure the S&P 500 below its support at 5,100, and drag Gold (XAU/USD) toward support at $2,280. Closer to home, Australian traders should watch the AUD/USD, which could test 0.6380 on a strong USD move. The ASX 200 is also vulnerable given its sensitivity to global risk sentiment and commodity prices like Iron Ore and Gold.
Bias
Bearish equities / Bullish USD โ If ING’s above-consensus CPI forecast proves correct, rate cut expectations will be pushed further out, supporting the USD and pressuring risk assets including the ASX 200, S&P 500, and Nasdaq.