Dollar Under Fire, Indices Pull Back After Strong Start to Week

Hello traders, welcome to Wednesday’s session. The key macroeconomic release of the day was the UK inflation report — and it did not disappoint. Inflation came in hotter than expected at 3.5% year-over-year, above the forecasted 3.3% and significantly up from the previous 2.6%. The market’s reaction was immediate and clear: the British pound is gaining across the board on the back of renewed expectations that the Bank of England might have to tread more carefully with rate cuts.

Meanwhile, the American dollar is under pressure. The greenback, which started losing ground overnight, is currently the weakest currency in the pack. This weakness is providing tailwinds for other majors, especially commodity-linked currencies and the British pound.

On the indices front, we’re seeing continued weakness after a strong start to the week. Monday’s risk-on rally is now facing some headwinds, with Tuesday delivering a pullback and Wednesday extending that correction. Futures in both the US and Europe are tilting red as traders reassess recent gains.

Commodities are telling a different story. Gold is powering higher, building on momentum that began on Tuesday. A strong bullish setup — including an inverse head and shoulders pattern — is adding technical weight to this rally. Copper and silver are also joining the upswing, both showing decent gains. Interestingly, palladium is down today, but this appears to be a modest pullback after a solid rally yesterday.

As it stands, we’re watching two main themes: continued weakness in the US dollar and a correction in global equity indices. The extent of both will shape the remainder of this week’s trading.

Source: https://www.axiory.com/analytics/market-news/dollar-under-fire-indices-pull-back-after-strong-s