EURUSD is now in the phase of technical downward correction after a strong upward movement caused by encouraging data on the reduction of inflationary pressures in the US economy.
A series of consumer price indexes was released this week on Tuesday. The values of the indexes showed a significant slowdown in inflation.
The index that reflects month-to-month changes, decreased from 0.4% in September to 0.0% in October.
This ultra-positive trend was in line with Fed Chairman Powell's earlier statements that policy tightening "may have gone too far".
Nevertheless, for the final clarity in the issue of neutralization of inflationary processes it is necessary that the November data confirms the emerging trend.
The November report will be published only in a month, but investors and traders need clarity now. Therefore, the community will be closely monitoring other data that will be released in the near future.
Here are the most important ones:
- Fed officials' speeches, which will take place on Thursday morning (North American Eastern Time);
- the manufacturing activity index of the Federal Reserve Bank of Philadelphia;
- the number of building permits issued in the US for October.
If the manufacturing activity figures and the dynamics of building permits show a slowdown, it will put additional downward pressure on the US dollar and stimulate EURUSD strengthening.
As for the statements of the Fed representatives, it’s important to look for hints on monetary policy easing in their speeches.
Returning to the EURUSD technical correction, the target is the level of 1.075. It’s the previous local maximum, which was broken upwards last Tuesday, and the price is likely to return to it again. After that, the upward movement is likely to continue, with the price fluctuating between 1.075 and 1.100. Only the next Fed meeting will bring clarity to the EURUSD movement outlook.
The final recommendation is to buy EURUSD from 1.075.
Profit could be fixed at the level of 1.100. Loss — at the level of 1.050.