Dollar Drift Waits on CPI; Cable Holds Above Resistance
A hot CPI would send USD broadly higher, testing cable support at 1.2800 and USD/CHF resistance at 0.8140. A soft print revives September rate cut bets.
The dollar is drifting through Wednesday's European session, with traders parked ahead of the U.S. consumer price index release due at 8:30 a.m. ET. The move will set the near-term path for the greenback after a pullback that took the dollar index off its early-month highs.
Against the Canadian dollar, the pair is edging higher. The recent drop brought USD/CAD near the 50% Fibonacci retracement of the rally from the October lows – the 1.3850 area – but the level has held so far, a trader in Toronto said. A break above 1.3950 after the CPI data would signal that the pullback is done, he added.
The dollar-Swiss franc pair is also drawing interest on dips. USD/CHF is a carry trade favorite given the rate spread, and one European desk said they would look to add near 0.8100. A break above the 0.8140 level would be a bullish trigger, though the pair could take its direction squarely from the CPI number.
Cable is a different story. Sterling broke above a resistance barrier from last week – the 1.2800 handle – and is grinding higher. The U.K. rates story remains supportive, with the Bank of England on hold while the Fed is seen cutting. A trader in London said they are buying dips in GBP/USD, calling it one of the few pairs where they are comfortable holding a long against the dollar.
Of course, the CPI release reshuffles the deck. A hot print would reinforce the case for the Fed to hold rates higher for longer, sending the dollar broadly higher and testing the support levels in cable and USD/CHF. A soft number would revive bets on a September cut, hurting the dollar and pushing cable toward 1.2900, traders said.
Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website's early days, he offers readers advanced market perspectives to navigate today's financial landscape with confidence.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.