Inflation data in the U.S. hits stock markets and bond yields soar.

An Unforgettable Event Elevating Trading Education 

The New York and European stock markets are trading with sharp declines, hit by inflation that is gaining strength in the United States. An interest rate cut this year by the US central bank (Fed) is in doubt.

The New York Stock Exchange opened Wednesday with sharp declines, hit by inflation that is gaining strength in the United States and casts doubt on whether the U.S. central bank (Fed) will lower interest rates this year. European markets also fell by up to 1%.

U.S. Treasury yields soared on Wednesday after higher-than-expected inflation data lifted the benchmark 10-year yield more than 10 basis points to 4.5%, its highest level since November last year.

U.S. consumer prices rose more than expected in March due to increases in gasoline and housing costs, casting further doubt on whether the Federal Reserve will begin cutting interest rates in June.

Two-year bond yields, which more closely reflect monetary policy expectations, rose nearly 20 basis points, then traded at 4.937%, also their highest level since November.

Fed funds futures traders reduced their expectations for interest rate cuts to a total of 43 basis points by 2024, down from 67 points prior to the inflation data.

The consumer price index rose 0.4% last month, after advancing the same margin in February, the Labor Department’s Bureau of Labor Statistics reported Wednesday. In the 12 months through March, the CPI rose 3.5%.

Technical analysis: EUR/USD declines after US CPI data.

EUR/USD looks trapped between the three significant simple moving averages (SMAs). On the short-term 4-hour chart it appears to be following a general sideways trend.

The 50-day and 200-day SMAs offer support at 1.0830 and 1.0831, while the 100-day SMA acts as resistance at 1.0873.

A decisive break above the 100-day SMA could see a rally to perhaps the March 21 high at 1.0942.

Alternatively, a decisive break below the MA cluster at 1.0835 could see a pullback evolve down to support at the April 2 low at 1.0725.

A decisive break below would be characterized by a long red candle penetrating and closing near its low, or three red candles in a row crossing the level.

The same would be true for a decisive break above, except with green candles instead of red.