Yesterday, the EUR/USD currency pair rose sharply after the publication of US inflation data. However, the momentum was short-lived and the trading session was closed near zero. Currently, the price is attempting to rise. In general, such movement is justified, as the inflation data was better than analysts' expectations.
The updated US Consumer Price Index released on Thursday showed a stable growth of inflation in July against the previous month. Its value is still above the target level set by the US Federal Reserve (Fed), so there isn’t much optimism in the markets. Market participants doubt the Fed will soon cut interest rates. However, most of them don’t expect its further rise in the coming months either.
It's worth noting that the indicator of consumer price growth turned out to be lower than analysts' forecasts. This is what the Fed is guided by in its monetary policy. Yesterday's data is positive for the dynamics of the euro against the US dollar.
Fed officials were divided on whether the central bank should stop raising rates. This is a positive signal for deleveraging, as earlier all the officials considered only rate hikes.
Federal Reserve Bank of San Francisco President Mary Daly said the US central bank has more work to do to control inflation even as data for July showed modest price increases. Philadelphia Fed President Patrick Harker said Tuesday that policymakers may be able to stop increasing interest rates.
The Fed would watch incoming economic data before the next meeting in September, including another report on the Consumer Price Index. Currently, investors don’t expect another rate hike this year based on the prices of futures contracts.
According to the technical analysis, the EUR/USD currency pair interrupted the downtrend with yesterday's upward price momentum. Today the dynamics remains the same, which gives an opportunity to open long positions.
The growth target will be the level of yesterday's maximum of 1.106. A Stop-loss should be placed at the level of 1.094 at the last days’ lows update.
Growth of the EURUSD currency pair:
Take profit — 1.106
Stop-loss — 1.094
This content is for informational purposes only and is not intended to be investing advice.
