US CPI popped 0.3% in September, while the core rate rose 0.1%. The former was in line with expectations but it the firmest print since the 0.4% rise in April, while latter was a little light of expectations. There were no revisions to prior months, where the headline increased 0.2% with the core up 0.3%. On an annual basis, the headline posted a 1.5% y/y increase versus 1.1% y/y for August. The core rate slipped to 2.2% y/y form 2.3% y/y. A 2.9% surge in the energy component paced the overall strength in September after a flat August print. The dollar traded lower after the in-line headline, but cooler core CPI reading, taking EURUSD to 1.1008 from 1.0995 and USDJPY down to 103.84 from just over 104.00.
Cable continued its positive day and traded to 1.2290 before returning to 1.2270 following the news. A six day floor is forming in the pair around 1.2200. A close today over 122.75 should see a further attempt at 123.00 and the 10 day EMA at 123.60, this would also coincide with the a 50% move in the ATR (Target 1) and move to Target 2 at 124.00. The 4 hour time frame has the pair over the 20 period MA, at the top of a widening Bollinger band and close to the 50 Period MA which is likely to provide resistance. The weekly and monthly time frames remain in down trends. The trade is therefore against the longer term time frames and therefore the targets remain limited to the 14 period ATR.
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