The Euro currency has strengthened well with the British currency for the last few days, and in fact, there should be a local rebound. However, investors are too concerned about the rapid growth of American inflation. And given the Fed's behavior, these fears are not groundless. In this case, even the European industrial production, which fell by -1.6%, did not affect the current condition in any way. Moreover, the data turned out to be quite good. After all, a decline of -2.0% was forecasted. So although the situation is clearly not the most pleasant, everything is not as bad as expected.
Industrial production (Europe):
Nevertheless, the need for at least some correction has not disappeared. It was clear that European currencies were moving quite sideways almost all throughout the day yesterday, as if they lacked the strength to continue increasing. They even showed a downward trend for some time. Thus, the market is really ready for a rebound, but an excuse is necessary. Apparently, the reason for this will be today's data on US retail sales, whose growth rate is expected to surge from 6.3% to 7.9%. It turns out that consumer prices are rising, together with the consumer activity. It is worth noting that this is an impressive increase in the profits of companies, which can accelerate the process of creating new jobs. In general, the combination is quite good and promising. Thus, investors will be able to slightly relax, and not worry so much about the inflation growth at least for a while.
Retail Sales (United States):
Moreover, the flow of America's positive macroeconomic news is not limited to this. For example, the rate of decline in industrial production is forecasted to slow down from -4.2% to -1.4%, which is noticeably different from Europe, where the decline in industrial production is only increasing.
Industrial Manufacturing (United States):
What's even more important is the labor market, which seems to have no intention of stopping there. The number of initial applications for unemployment benefits should be reduced from 744 thousand to 715 thousand. At the same time, the number of repeated applications for unemployment benefits is likely to fall from 3,734 thousand to 3,600 thousand. As we can see, the labor market continues to recover, which will add to investors' optimism.
Number of re-claims for unemployment benefits (United States):
Moving along an upward course from the pivot point of 1.1700, the EUR/USD pair managed to return the quote to the area of the psychological level 1.2000. Such a strong inertial price movement has developed a local overbought euro status in the market, which together with the psychological level of 1.2000, can lead to a reduction in the volume of long positions and as a result, an increase in the volume of short positions.
Similarly to its European counterpart in the market, the GBP/USD pair is moving along an upward course, but the scale of price changes is several times smaller. We can assume that the pound will continue to concentrate on price fluctuations within the range of 1.3750/1.3800, where one should work on a breakdown of particular border of the formed range.
