The CPI print has resulted in a significant dollar selloff. The candle is still to complete, but at the time of writing, FXCM's USDOLLAR basket was near 0.9% down on the day. Of interest, its daily chart has charted a head and shoulders top. This marks a reversal pattern and could imply further downside ahead. The pattern's downside target is 2.63% lower at 12,492. We note that targets are academic - they may or may not be hit. However, the takeaway is that price action has turned bearish following a potential turning point in inflation. The pattern's neckline is in danger of capitulating. Markets are forward-looking, and given this price action, it seems to be pricing the moderation in Fed aggressiveness.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.