The inflation data for the United States is very alarming. Not only that, a month earlier, the growth rate of consumer prices accelerated from 1.7% to 2.6%, which is a pretty strong upward push. So this time, inflation rose to 4.2%, despite the fact that growth was projected to 3.8%. The last time inflation rose to such high values was only in 2008. And judging by inflation, the American economy is in a situation of a serious economic crisis — not the consequences of the coronavirus pandemic, but this crisis. And this is somewhat scary. Officials, including representatives of the Federal Reserve System, tirelessly assure everyone that things are going just fine and the economy is confidently recovering. But the most interesting thing is not even that. A month ago, as soon as inflation jumped above the target level of 2.0%, the dollar began to actively depreciate. The engine of this movement was fears that the Federal Reserve System may urgently raise the refinancing rate, for which neither the markets nor the economy are ready. In theory, yesterday's data should have provoked an even greater weakening of the dollar, but we saw a completely different picture. After some hesitation, the dollar began to grow steadily. This is possible only if investors with speculators take their word for it from the Federal Reserve System and do not take into account the real state of affairs. That is, no one assumes that inflationary dynamics simply forces a tightening of monetary policy, and it would be worthwhile to prepare for this in advance. This is quite scary, to be honest. The consequences of such reckless actions can be disastrous.
Inflation (United States):
Today, data on applications for unemployment benefits are published, which are unlikely to have any impact. The number of initial applications may decrease from 498 thousand to 451 thousand. The number of repeated applications should decrease from 3 690 thousand to 3 640 thousand. After the recent increase in the unemployment rate, such a slight decrease in the number of applications does not strongly inspire confidence that employment will grow noticeably. In other words, you should not count on a decrease in the unemployment rate yet. But more importantly, the rate of growth in producer prices should accelerate from 4.2% to 6.1%. This means that inflation will continue to grow further. Consequently, the likelihood that the Federal Reserve will raise the refinancing rate only increases. But judging by yesterday's market reaction to inflation data, no one is preparing for this. In other words, the data will simply be ignored.
Producer Price Index (United States):
During the last trading day, the EUR/USD currency pair showed high activity. As a result, the lower border of the sideways range 1.2115 / 1.2180 was broken, and the quote rushed towards the value of 1.2065.
The market dynamics after several days of deceleration again shows signs of acceleration, which is confirmed by both the growth of speculative operations and the structure of the candlesticks.
If we proceed from the current location of the quote, we can see that after an intense downward move, the quote slowed down in the area of the value of 1.2065, where there was a consolidation fluctuation in the price in the range of 1.2065 / 1.2085.
Considering the trading chart in general terms, the daily period, it is worth highlighting the V-shaped price movement in the period from February to April.
In this situation, it can be assumed that price fluctuations in the 1.2065 / 1.2085 range will be considered a temporary phenomenon in the market, where speculators will again go on the offensive. The most optimal trading tactic will be the method of breaking through one or another border of the range.
From the point of view of a comprehensive indicator analysis, it can be seen that the indicators of technical instruments on the minute and hourly intervals have a sell signal due to the downward impulse during the previous trading day. The daily period is still focused on the upward price movement.
