The U.S. dollar hit a more than two-week high against a basket of major currencies today after U.S. inflation data boosted bets the Federal Reserve would raise interest rates in December, and touched a one-month high against sterling on worries over Britain's Brexit vote.
U.S. consumer prices increased more than expected in August as rising rents and healthcare costs offset a drop in gasoline prices, pointing to a steady build-up of inflation that could allow the Federal Reserve to raise interest rates this year.
A short-term downward trend has broken down and the 50-day moving average is now pointing higher with price sitting above it, for now. In the short-term, a bullish scenario would be if price were to break resistance at 1.3280. If seen, this should pave the way for a move toward 1.3370/5 area next, which was previously resistance.
The dollar displayed extreme signs of sensitivity on Tuesday with prices left vulnerable to heavy losses as expectations fluctuated over the Federal Reserve raising U.S. interest rates in 2016. Conflicting data such as the strong NFP and poor retails sales have placed the dollar in a fierce tug of war with investor anxiety mounting ahead of Wednesday’s FOMC meeting minutes.