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Uncle Sam is about to print the August CPI report!

Can this dollar pair break out from a reversal pattern during the release?

Before moving on, ICYMI, yesterday’s watchlist looked at a potential reversal setup on GBP/USD. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Japanese BSI manufacturing index recovered from -9.9 to +1.7

Japan’s producer prices up by 9.0% y/y vs. projected dip to 8.9%

Australian Westpac consumer sentiment index rebounded by 3.9%

Australian NAB business confidence index up from 8 to 10 in Aug

Asian shares extend recovery, but FX ranges tight ahead of U.S. CPI

German final CPI unchanged at 0.3% as expected

U.K. average earnings index accelerated from 5.2% to 5.5% vs. 5.4% forecast

U.K. claimant count increased by 6.3K vs. estimated 13.2K decline

U.K. jobless rate dipped from 3.8% to 3.6% on lower participation rate

Swiss producer prices dip by another 0.1% vs. estimated 0.1% uptick

Upcoming Potential Catalysts on the Forex Economic Calendar:

German and eurozone ZEW economic sentiment at 9:00 am GMT
U.S. headline and core CPI at 12:30 pm GMT
New Zealand current account balance at 10:45 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: NZD/USD

NZD/USD 1-hour Forex Chart

NZD/USD 1-hour Forex Chart

We’ve got the highly-anticipated U.S. CPI report on today’s docket!

With the dollar on the decline so far this week, can this top-tier release spark more losses for the U.S. currency?

Technical indicators on the hourly time frame of NZD/USD are suggesting so, as the moving averages are showing a fresh bullish crossover.

To top it off, Stochastic is already indicating oversold conditions, with a bullish divergence to boot. See the oscillator’s lower lows and the pair’s higher lows?

NZD/USD has yet to break past the neckline resistance around the .6150 minor psychological handle to confirm that an uptrend is underway. If that happens, price could climb by the same height as the inverted head and shoulders pattern or roughly 150 pips.

Weaker-than-expected U.S. CPI might be enough to do the trick, as significantly slower inflation might give the Fed enough reason to take it easy with its aggressive tightening moves.

On the other hand, another upside surprise in price pressures could point to much higher borrowing costs down the line, which might be bullish for the dollar.

Either way, don’t forget to practice proper risk management if you’re trading the news!