Daily summary: USD strengthens on jump in US inflation

• European indices remain near record levels
• US CPI inflation rate highest since 2008
• Strong start to second-quarter earnings season
• Dollar returned to 3-month highs

Major European indices finished today's session slightly lower but still remain near their record-high levels, after ECB President Lagarde said the central bank's response to the pandemic crisis has to be "especially forceful or persistent" and that the policymakers will not make the same mistake of tightening policy too early. Also upbeat trade data from China eased concerns about a slowdown in global economic recovery.

Across the ocean, S&P 500 and Nasdaq fell slightly after hitting new all-time highs as earnings season kicked off on a positive note, while a solid rise in consumer prices in June weighed on sentiment. Goldman Sachs, JPMorgan Chase and PepsiCo easily beat market expectations. Meanwhile the headline inflation hit 5.4% in June, the highest level since August 2008 and above analysts’ estimates of 4.9%, due to supply constraints and a rebound in costs of travel-related services. Investors remain concerned that inflationary pressures may lead to faster than expected monetary tightening, despite the Fed's assurance that CPI growth is likely to be temporary. This, in turn, led to the strengthening of the US currency, which gained the most against EUR and CAD, where the movement exceeds 0.5%. The dollar also appreciated over 0.4% against NZD and over 0.3% against GBP, CHF and AUD. By contrast, the Japanese yen fell 0.25% against USD.

USDIDX - today's daily candle covers the previous two bearish candles, which indicates that the upward movement may continue in the near future. The nearest key resistance is located at 93.50 and is marked with the neckline of a potential, huge double bottom structure. Meanwhile the zone around 91.35 acts as major support.

Source: xStation5