Forex Today: Markets Await US Inflation After EUR/USD Tests Parity

The strong US Dollar continues to advance, causing the EUR/USD currency pair to briefly touch and test parity yesterday at $1.000, and pushing the GBP/USD currency pair to another new 2-year low. The Dollar fell later but began to gain again during the Asian session. This is a very strong trend in the Forex market, so there is probably a good opportunity to trade the US Dollar long as the move has very firm momentum, although today’s US CPI data release could cause unexpected volatility and price movement later. There seems to be no stopping the greenback and it is feared that its appreciation is going to hurt US corporate earnings and further knock the stock market.The Euro remains the weakest major currency. Euro weakness is partly driven by fears that Russia will cut off key energy exports to the EU.Stock markets and commodities moved firmly lower yesterday on risk-off market sentiment, with the S&P 500 Index down by almost 1% in yesterday’s trading.

The Reserve Bank of New Zealand raised its Official Cash Rate earlier today by 0.50% to 2.50%, which had been widely expected.Markets are looking forward to this Wednesday’s crucial US CPI data release, which is very likely to be this week’s main market driver. Yesterday, a White House spokesperson stated that Wednesday’s data is likely to be “highly elevated”, suggesting the rate will strongly exceed the forecasted month on month increase of 1.1%.The Bank of Canada is expected to hike its Overnight Rate later today by 0.75% to 2.25%.Daily new coronavirus cases globally rose again for the third consecutive week, caused by the omicron subvariant BA5.It is estimated that 66.8% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.1% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger. Total confirmed new coronavirus cases worldwide stand at over 563 million with an average case fatality rate of 1.13%. The rate of new coronavirus infections appears to now be significantly increasing in Bolivia, Belgium, Colombia, Croatia, Iceland, Lebanon, Montenegro, Slovenia, Switzerland, Albania, Austria, Brunei, Cyprus, France, Germany, Greece, Guatemala, Iraq, Italy, Japan, Mexico, New Zealand, Paraguay, Singapore, and Tunisia.