The day ahead is likely to be a big one for the US dollar, thanks to two big events scheduled for today. The first one will be the release of the US CPI report for September at 1:30 pm BST. The second one will be the release of the FOMC minutes at 7:00 pm BST.
CPI inflation report is expected to show price growth remaining unchanged compared to August with headline gauge staying at 5.3% YoY. Core gauge is also expected to remain unchanged at 4% YoY. However, an unexpected acceleration would give the Fed even more reasons to act soon. Speaking of monetary policy, FOMC minutes from the meeting that was seen as a hawkish tilt will be released this evening. The Fed hinted that should the economy develop as expected, a taper announcement will come soon. Markets see it as a done deal and therefore minutes release may not have that big of an impact on the market.
Taking a look at the US dollar index (USDIDX), we can see that it has reached an important price zone at 94.50 that saw price reactions as far back as in 2015. Higher-than-expected inflation reading could see the index push above this hurdle. In such a scenario, bulls’ attention will shift to the 50% retracement of a downward move launched in Q1 2020 (96.50 area). On the other hand, failure to break above the 94.50 resistance may see USDIDX pull back towards the upward trendline that currently runs near the 93.00 area.