Also near that area is a swing area between 0.7068 and 0.7094. Moving above all those levels would increase the bullish bias and have traders looking toward the 200 day moving average at 0.71522 as the next key target on the daily chart.

On the downside, the pair today also broke above it 38.2% retracement of the move down from the April high to the July low. That level comes in at 0.70552 and represents close support on a dip. Move below and there could be some disappointment in the failure to crack above the topside targets and stay above the broken 38.2% retracement level.

The USDCAD is moving to a new session low and in the process is getting closer to its rising 100 day moving average at 1.27925. The low price just reached 1.28009 (a natural support level as well).

Going back to the 1st day of the calendar month, the price dipped below its 100 day moving average on its way to a low price of 1.2767. The 100 day moving averages at 1.2775, but momentum to the downside could not be sustained and the price rallied sharply over the next week or so.

US equity markets are storming higher at the open after a lower-than-expected CPI reading and risk trades are surging. One of them is AUD/USD, which is up 89 0pips to 0.7053. That breaks the July 31 high and is the best since June 15.

It's part of a broad slump in the US dollar but AUD and NZD are the two best-performing major currencies today. That's an indication of better sentiment on global growth and diminishing fears about rate hikes.

The pair is also dipped below its 200 day moving average for the 1st time since the end of March. That 200 day moving average comes in at 0.9428. The price is currently trading just below that level at 0.9424. The low price for the day reached 0.9406.

On the daily chart there is not a a lot of support until 0.93822 which was a swing hi going back to March 28. A swing area between 0.93658 and 0.93822 is home to a number of swing highs going back to September 2021. That area should find some dip buyers/profit taking on the first test.

For now, the sellers are in control with the 0.9453 – 0.9469 area as key resistance above. Stay below is more bearish.

The implied odds of a 75 basis point hike at the Sept 21 FOMC are down to 37% from 68% yesterday as the market senses peak inflation. We will get another CPI report before then but with gasoline prices continuing to fall, there's a good chance it's also low.

Along with the drop in the dollar, US equity futures are soaring with eminis up 75 points, or 1.8%.

Notably, the US dollar was curiously strong ahead of the data. Some traders noted that the White House didn't pre-announce anything about CPI. Previously, they had 'prepared' the public. Before the prior release, the White House said it expected the June reading to be 'highly elevated'. This time it was silence and whether that was deliberate or not, some saw it as a tipoff.

What's interesting is that the dollar is curiously soft into the data. That might be traders clearing out of the crowded long-USD trade on risks around the report. It's also notable that there haven't been warnings from the White House about the data, which some might take as a sign it will be on the low side (if you can consider something a bit less than 8.7% as low).

Last month, the CPI reading was +9.1% compared to +8.6% expected and it led to the market pricing in a 62% chance of 100 bps at the July Fed (up from zero before the report).

On that day, the euro touched parity but only for an instant and then it lept to 1.0050 and later to 1.0122 before settling back to 1.0056. USD/JPY gained only 56 pips on the day.

The CHF is the strongest and the USD is the weakest as the North American session begins. It will be all about the CPI data which will released at 8:30 AM with expectations for the headline number to rise by 0.2%. The core measure for the month is expected to rise by 0.5%. The YoYs are expected to show a dip to 8.7% from 9.1% for the headline and a rise to 6.1% from 5.9% for the core. Late yesterday, Fed's Bullard an interview with MNI said:

The increase in mortgage activity owes to refinancing in the past week as home purchases were seen falling once again. As the Fed's battle against inflation continues to rage on, it is hitting the US housing market and that is something to be wary of as economic conditions does show signs of worsening in the months ahead.

The PBOC also says that the price target for 2022 can still be achived, though they are vigilant on structural inflation pressures. Adding that consumer inflation may pick up in some months during 2H 2022 and may exceed 3% in stages (h/t @ Sino_Market). The remarks from the central bank aren't anything new and just reaffirms that China is sticking with its existing policy settings in order to keep the economy supported.

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Bitcoin lost 3.8% on Tuesday, ending it at around $23.2K, and is developing a decline to $22.9 by Wednesday morning. Ethereum has lost 5.6% in the last 24 hours, to $1680. Top altcoins are down 2.5% (BNB) to 7.2% (Solana).

Total crypto market capitalisation, according to CoinMarketCap, fell 3.9% overnight to $1.08 trillion.