Markets continue to fluctuate ahead of latest inflation data from the US. However, both stock indices and currency pairs, along with commodity asset prices and government bond yields, remain within relatively narrow sideways ranges.
Most likely, investors could not make a definitive decision, as much depends on whether the decline in inflation slows down or not. An increase in the figure will certainly trigger the Fed's decision to raise rates at the next meeting, since the topic of price stability remains paramount to the central bank.
Naturally, in such conditions, demand for stocks will face pressure at best, and at worst, sales will intensify. Previously, markets believed that the Fed could end the rate hike cycle this summer and, interestingly, would start lowering them early next year to stimulate economic and business activity in the country.
As mentioned earlier, consolidation will continue due to the anticipation of the US CPI data due out on Thursday. The most interesting developments will start tomorrow.
In terms of dollar, it recently rose due to concerns about the stability of the US economy, epitomized by Fitch Ratings' decision to cut the credit rating. However, two 0.25% rate hikes, one of which already occurred in July, and another expected in September, will likely affect dollar's exchange rate against other currencies.
Forecasts for today:
EUR/USD
The pair trades within the narrow range of 1.0915-1.1045 ahead of fresh inflation data in the US. Data showing an increase in inflationary pressure will lead to a breakout of the lower boundary, as well as a drop toward 1.0835.
XAU/USD
Price remains above the strong support level of 1923.00. However, a breakout, which could happen amid a rise in US inflation, will lead to a drop to 1908.00.
