Fed's Preferred Inflation Gauge Hits 3-Year High

Inflation reaching a three-year high increases concerns that the Fed may delay rate cuts or even tighten policy. On the SPX, the RSI at 61.7 is approaching overbought territory, while the MACD has fallen below the signal line, signaling short-term weakness. Although the price is trying to stay above the 20-day moving average, selling pressure could emerge with the inflation news. In the short term, upside movement is likely to be limited, and a pullback may occur.

The DXY is trading at 99.19, remaining below both the 20-day SMA (99.32) and the 50-day SMA (99.21). The RSI at 43 indicates weak momentum, while the MACD below its signal line confirms negative short-term momentum. Although the news headline suggests the Fed could adopt a more hawkish stance if inflation comes in higher than expected, the technical structure of the DXY is already weak. Higher inflation data could provide short-term support for the dollar, but the current technical outlook increases downside risks. Therefore, a continuation of the bearish trend in the short term appears more likely.

The news indicates that inflation came in higher than expected, suggesting the Fed may continue its tightening policies. This creates an unfavorable environment for non-yielding assets like gold. Technical indicators also confirm weakness: the RSI is approaching oversold territory at 35.6, while the MACD remains below the signal line and in negative territory. The price is trading below both the 20-day and 50-day moving averages. Selling pressure is likely to persist in the short term, though the pace of decline may be limited due to oversold conditions.