The US dollar pulled back from one-year highs, and the US stock market closed higher on Wednesday. At the time of writing, the major stock indices futures were green during the Asian trading session.
The market reacted to inflation data and Federal Open Market Committee (FOMC) meeting minutes, ending near extremes in several major instruments and indices.
Traders should be wary of the dynamics of the US debt market.
Minutes from the September FOMC meeting indicate that tapering could start as early as mid-November, and a rate hike by the end of 2022 is already completely priced into the Fed Funds Rate Futures market.
At the same time, Two and three-year bond yields decreased, indicating that policy tightening would start quickly and unfold gradually.
This revaluation wasn't good news for the dollar, causing the DXY to retreat from 94.6 to 94.0.
As the RSI divergence retreats from the overbought area above 70 on the daily charts, a further correction is likely.
EUR/USD - Technical Outlook
EUR/USD's 0.6% jump to 1.1600 lifted the pair above the downward resistance line, in force since early September.
A consolidation above 1.1600 today would be the first clue that the pair's uptrend could break down. And a rise above 1.1640 could confirm the uptrend.
The jump in EUR/USD is not a strength of the euro against its peers.
It remains near cyclical lows against the pound at 0.8475 and has broken through support at 1.07 against the Swiss franc, melting to lows last seen in November.
S&P 500 - Technical Outlook
The S&P 500 tested its downside resistance. Since morning, futures have been trading above it, but we should wait for the US market's reaction.
A consolidation above the area of the prior local highs near 4400 is worth waiting for.
Gold Jumps Amid Inflation Concerns
Gold made a ~2% jump on Wednesday, approaching $1800, the 200-day moving average.
A meaningful sign of a bearish trend reversal in gold would be a consolidation above $1800 and confirmation to overcome previous local highs at $1836.