US CPI crushes estimates, putting USD/ZAR, USD/TRY under pressure

USD/ZAR, USD/TRY talking points:

Did a hot US CPI print solidify another 75b/p rate hike?

Persistent inflation compromised the request for Emerging market currencies with lockdowns in China and the strength of the US dollar providing further catalyst for developing countries.

For the South African Rand (ZAR), down commodity prices and a reduction in the number of goods exported to China is an additional headwind for the Volatile randwith the “shedding” and the refuge call greenback bringing USD/ZAR back to September 2020 levels.

Following the release of US inflation data, a new US CPI reading of 9.1% (y-o-y) in June appears to have bolstered the Federal Reserve’s outlook for raising interest rates. at least 75 basis points in July. FOMCstrengthening the attractiveness of the dollar.

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USD/ZAR Technical Analysis

On the release of the data, USD/ZAR rallied strongly before hitting a wall of resistance at 17.175.

USD/ZAR 5-Minute Chart

US CPI crushes estimates, putting USD/ZAR, USD/TRY under pressure

Chart prepared by Tammy DaCosta using TradingView

However, once the information was digested, the bears were able to pull prices back below 17.00. psychological level (current resistance) with the next support level steady at 16.753 (the 23.6% Fibonacci of the move August 2020 – June 2021).

USD/ZAR daily chart

US CPI crushes estimates, putting USD/ZAR, USD/TRY under pressure

Chart prepared by Tammy DaCosta using TradingView

USD/TRY Technical Analysis

Meanwhile, the Turkish lira is back above the June high at 17.43 in an effort to lift USD/TRY above 17.5. After temporarily dropping to 16.04 late last month (June 26), a quick rebound allowed the bulls to regain control of the prevailing trend, pushing the CCI (Commodity Channel Index) close to overbought territory.

USD/TRY daily chart

US CPI crushes estimates, putting USD/ZAR, USD/TRY under pressure

Chart prepared by Tammy DaCosta using TradingView

As shown on the hourly chart, recent price action has traded in a wider range, with the 14.4% Fibonacci providing further support at 17.185. For the uptrend to remain intact, price action will need to break above the current range, bringing the 18.00 handle into play.

USD/TRY hourly chart

US CPI crushes estimates, putting USD/ZAR, USD/TRY under pressure

Chart prepared by Tammy DaCosta using TradingView

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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