By ForexTime
A mixture of geopolitical risk and cooling Fed cut bets continue to support upside gains.
And the dollar could see more volatility this afternoon thanks to the incoming US inflation data.
US inflation is expected to cool further in September, supporting expectations around lower US interest rates. However, last Friday’s strong jobs data has extinguished hopes around another jumbo-sized cut by the Fed.
In fact, traders are now pricing in an 85% probability of a 25-basis point cut by November with a 77% probability of another 25bp cut by December.
Beyond the CPI report, it will be wise to keep an eye on other US data and speeches by numerous Fed officials which could provide more clues on the Fed’s policy path.
Taking a look at the charts, the USDInd is firmly bullish on the daily charts with prices hitting a fresh two month high. The index has gained roughly 2% since the start of October, taking its YTD gains to 1.6%.
After shedding almost 5% in Q3, dollars bulls could stage a return this quarter if bets around lower US interest rates continue to fall.
Since securing a solid close above 101.94, bulls have their eyes on the 100-day SMA at 103.30. However, the Relative Strength Index (RSI) is signalling that prices are near overbought territory.
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