Data released Tuesday showed the US consumer price index jumped 0.9% in June, climbing 5.4% on the year. Additionally, the core inflation rose 0.9% month-on-month, and 4.5% yearly, the fastest pace of inflation in many decades.
The USD surged initially, but it looks like Wednesday could be an anti-trend day, especially since traders are now getting focused on today’s Powell testimony, who is due to testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee in Washington DC.
He will most likely reiterate that inflation is transitory, although investors could soon stop buying that. Additionally, Powell is expected to pledge that monetary policy will remain ultra-lose for many months to come.
From other news, the Canadian central bank decides about monetary policy today, which will influence the USDCAD pair.
US stock markets pushed to record highs yesterday, but failed to hold gains and declined into the close, posting reversal bars on daily charts. Today’s trading will be interesting whether the reversal pattern will be confirmed, or bulls push indices to new highs again.