11.01.2023: USD drops ahead of CPI data; outlook for EUR/USD, GBP/USD

Although yesterday morning there were signs of a correction, the market remained flat in the middle of the day. Currencies did not move. Yet, the greenback was extremely oversold. To some extent, the reason might be the empty economic calendar. However, it does not mean there couldn't be some technical rebounds.

It appears investors see no reason for a rise in the greenback. They seem to be pricing in its further decline. The US inflation report is on tap tomorrow. It may signal a possible slowdown in monetary tightening by the Fed. The US dollar has already depreciated significantly. Speculators need new fundamental factors to maintain a bearish trend. However, the economic calendar has been uneventful for two days. This is why the greenback is likely to be trapped in a narrow range until there are some strong drivers.

The euro/dollar pair also entered a narrow range yesterday amid the lack of crucial news or events. We did not see a correction because of the technical signal about the overbought status of the euro. It indicates that the bullish trend prevails.
The price is unlikely to stay in a narrow range of 1.0710/1.0760 for too long. It is sure to break out in the nearest future. As a result, there might be a strong rebound.
The pair is likely to rise if it consolidates above the 1.0770 level on the 4-hour chart. If so, traders are sure to increase long positions. The pair could jump to a swing high of the upward cycle.
The bears may take the upper hand if the price declines below 1.0700 on the 4-hour chart. In this case, a strong downward correction may take place after stagnation.
The pound/dollar pair halted its growth around 1.2200. As a result, there was a pullback of about 90 pips. It signals the accumulation of trading forces.
After a retreat, the pair slid into the narrow range, trading near 1.2150. So, there could be new price swings from this level. Judging by the technical indicators, the price may climb if it consolidates above 1.2200. In this case, it is likely to resume an upward movement.
The quotes could fall again after a correction if the pair settles below 1.2130 on the 4-hour chart.

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00:28 QUOTES
01:13 EUR/USD
02:15 GBP/USD