The US dollar fell to three-week lows overnight after a well-telegraphed beat in the US inflation data failed to move the US Federal Reserve’s policy normalisation dial.

FX traders are deferring the Fed’s call for lift-off later rather than sooner. The Johnson & Johnson imminent vaccine suspension might have helped that view by possibly pushing back herd immunity in the US.

At a minimum, it certainly didn’t enhance the US dollar appeal.

Euro trades higher

EURUSD traded higher after the US March CPI showed robust data. The pair traded down to 1.1880 before reversing higher and then sliced through 1.1920/25 level that capped it in the past few days like a hot knife through butter.

With 1.1950 currently being tested on a clean break, 1.2000 is the following technical resistance levels to watch. Gripping price action indeed, indicating that the short-term pain trade in the EURUSD remains to the topside.

High oil price a boost to Malaysian Ringgit

The Malaysian ringgit should embellish the combination of lower US yields and more stable oil prices. Crude is starting to find some comfort at the upper end of this week’s range.

Gold finds support

Gold continues to be bought by stronger hands triggered by the weaker US dollar and falling US bond yields after a sturdy inflation print combined to enhance gold’s appeal.

In March, India announced that they imported 98 tonnes of gold, which puts the annual total at nearly 190 tonnes, roughly in line with YTD ETF liquidations of 200 tonnes.

Even though gold spot prices have been stuck on either side of $1725 for approximately a month now, investors can take solace in the fact that liquidations are finding their way into India’s physical market, which is a very “sticky” market.

Also, looking at China’s customs data and imports through Hong Kong and direct implications via Switzerland, an additional 19 tonnes on demand were observed there through the first two months of the year. I think the trend continues throughout March and suggest gold is flowing into stronger hands.

On top of that, some Eastern European Central Banks continue to top up gold reserves.

Market analysis from Stephen Innes, Chief Global Market Strategist at Axi