FX traders are expecting to see some big moves in the dollar in the New York session on Tuesday with the release of the first key inflation update of the week. CPI numbers are due out early in the day and after another stronger than expected Non-Farms Payroll result on Friday, sticky inflation data could push Fed interest rate cut expectations out of 2026 and even out of the door if they come in higher than expected, with some market participants already calling for the next move to be a hike from the world’s most influential central bank.
The market is expecting to see the headline month-on-month number fall from last month’s 0.9% increase to a 0.6% increase this month with the crucial year-on-year number rising to a hefty 3.7% increase on the back of the surging energy market. Core data is expected to have a 0.3% monthly increase and the annual figure to come in with a 2.7% increase, still way above the Fed’s 2% target level.
Cable is setting up nicely from a technical point of view on the daily chart for a good move if the data prints off expectations. It has rallied nicely from levels under 1.3200 early in April to highs around 1.3650 in May and a strong result either way should see some good percentage moves in the short-term and maybe break into fresh ranges for longer-term players if it coincides with the dollar move from a geopolitical perspective. It is currently trading just under strong resistance levels on the chart, and a stronger result should see it drop back into recent ranges, whilst a surprise weaker print should see those resistance levels break and the pound move higher to challenge annual highs just under 1.3900.
Resistance 2: 1.3867 – 2026 High and Trendline Resistance
Resistance 1: 1.3658 – May High and Short Term Trendline Resistance
Support 1: 1.3422 – 200 Day Moving Average
Support 2: 1.3254 – Long Term Trendline Support
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