The European currency continued its upward trend, which is not surprising after a weak inflation report in the U.S., which many traders and investors have made a serious bet.
The minimal increase in the consumer price index points becomes a deterrent to the further increase in interest rates in the U.S. this year. Apparently, rates are unlikely to be raised as experts expected in the first quarter of the year.
According to the report of the US Department of Labor, the consumer price index rose only 0.1 percent in December 2017 compared to November, which fully coincided with the expectations of economists. The basic CPI index, excluding the volatile categories of goods, increased by 0.3 percent. Economists expected the base index to grow by 0.2 percent compared to November.
Compared to the same period in 2016, sales growth was very significant and amounted to 4.2 percent after an increase of 3.2 percent.
Data on retail sales slightly supported the U.S. dollar, despite the excellent performance from retailers. According to the report of the U.S. Department of Commerce, retail sales increased by 0.4 percent in December 2017 compared to the previous month. Economists also expected sales to be at the level of 0.4 percent. Sales in December, excluding cars, increased by 0.4 percent while economists expected growth of 0.3 percent.
Compared to the same period in 2016, sales growth was very significant and amounted to 4.2% after an increase of 3.2%.
Inventories of companies in the U.S. rose by 0.4 percent in November, which amounted to 1.895 trillion US dollars. Economists had expected that stocks would grow by 0.4 percent.
Volatility may be very limited in the afternoon since today marks the day of Martin Luther King in the U.S.
Correction in the EUR/USD pair will be quite realistic, and in the case of a breakdown of the intermediate support level of 1.2200 allows the expectation of an update and test to the level of 1.2160 and 1.2130 in the short term.
In the event of a break and consolidation above the current high at 1.2240, a bullish impulse may be supported by larger players, which will lead the risk assets to areas of 1.2300 and 1.2350.
However, given the low fundamental background, it is better to expect the continuation of the euro's growth by the middle of the week, when the data for the December consumer price index of Germany comes out, followed by the December CPI index of the eurozone to be released on Wednesday.
