EURUSD rose slightly after hitting a January low of 1.0487. Ahead of the US inflation data release, the dollar and 10-year Treasury bond yields hit their maximum levels in four quarters.
According to Nicholas Frappell, an analyst at ABC Refinery, the US dollar was influenced by statements from the US Federal Reserve (Fed) that interest rates will remain at high levels for a long time.
Today, market participants are expecting the publication of the consumer spending price index. However, a partial government shutdown is looming, which could affect the release of economic data.
According to market analyst at IG Tony Sycamore, the lack of data could create a "vacuum of uncertainty" as the Fed tries to decide whether to tighten monetary policy further this year.
Meanwhile, Europe's leading economy managed to slow inflation significantly in September, hitting 4.5%. This was 1.6 percentage points lower than in August. This happened after the effect of discounts on public transport stopped affecting the calculations last summer.
Such data was published by the German Federal Statistical Office. Similar inflation figures were last seen in the FRG in February 2022.
The performance of the German economy reinforces expectations that the European Central Bank (ECB) will end the cycle of interest rate hikes after a long series of increases. There have been 10 consecutive rate hikes. A pause in monetary tightening does not automatically mean a rate cut. ECB officials say they intend to keep interest rates relatively high for an extended period of time to bring inflation back to the 2% target.
German inflation has stopped the EURUSD crash. The currency pair is forming a downtrend on the H4 timeframe.
The RSI indicator (standard values) demonstrates divergence. This divergence gives a leading signal to a change in the currency pair rate. Corrective growth inside the downtrend is necessary to build up new bearish positions.
Signal:
The short-term outlook for the EURUSD pair is to buy.
The target is at the level of 1.0695.
Part of the profit should be fixed near the level of 1.0650.
A stop-loss should be placed near the level of 1.0475.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
