US CPI and 2nd day of Powell testimony. USD is mixed to kickstart the day

As the North American session begins, the EURUSD and the GBPUSD are marginally higher (lower USD).

The USDJPY is also higher after BOJ Ueda stated that he will closely monitor the impact of U.S. tariff and immigration policies, as both are considered inflationary in the U.S. and could influence Japan’s economic outlook. He expressed particular interest in the new U.S. administration’s policies and emphasized that the pace of Japan’s monetary policy adjustments should be guided by economic conditions.

Not much in his comments but he did not say a hike is on the way (and may have implied no change is the tilt). Technically, the price moved above the 100/200 day MA on the move to the upside giving the buyers some control with work to do.

The video above talks to the technicals that are driving the three major currencies – the EURUSD, USDJPY and GBPUSD – as the US/North American session begins.

At 8:30 AM ET, the US CPI will be released with the expectations showing that the headline and the core will come in at 0.3%, with the headline YoY coming in at 2.9% (unchanged from last month). The core YoY is expected at 3.1% down from 3.2% last month. Looking ahead for the core MoM and the headline, the next three months will see two 0.4% gains and a 0.3% fall out of the equation for YoY. If inflation is less than that, the core and headline moves lower, but it will not make it to the 2% target.

At 10 AM, Fed’s Powell will have day 2 on Capitol Hill. The Fed Chair is stumping for keeping rates where they are as inflation remains high.

Pres. Trump just posted that “Interest rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!. Lets Rock and Roll, America!!!” The agenda for day 2 may have just been established.

Powell seems to want to wait and see what the impact is on inflation and growth (i.e. be data dependent). The battle is on.,

US stocks closed mixed yesterday with the Nasdaq moving lower, the S&P near unchanged and the Dow higher::

• Dow industrial average rose 123.24 points or 0.28% at 44593.65
• S&P index rose 2.07 points or 0.03% at 6068.51
• NASDAQ index fell -70.41 points or -0.36% at 19643.86

The small-cap Russell 2000 was also lower on the day with a decline of -12.23 points or -0.53% at 2275.70.

Today, the futures are implying small changes in the major indices::

• Dow industrial average -3.65 points
• S&P index +5.75 points
• Nasdaq index +60.75 points

European major indices are trading higher in the US morning snapshot:

• German DAX, +0.35
• France’s CAC +0.01%
• UK’s FTSE 100 +0.11%
• Spain’s Ibex +0.86%
• Italy’s FTSE MIB +0.35%

In the US debt market, the yields are higher on inflation concerns from tariffs

• 2-year yield, 4.296%, +0.6 basis points
• 5-year yield 4.380%, +1.0 basis points
• 10-year yield 4.545%, +0.8 basis points
• 30-year yield 4.757%, +0.8 basis points

At 1 PM, the US treasury will auction 10-year notes. The three year note auctions yesterday was met with strong international demand.

This article was written by Greg Michalowski at www.forexlive.com.