Inflation in the United States has jumped from 1.7% to 2.6%, which generally coincided with forecasts, and became the reason for the rapid growth of the single European currency. Such an increase in inflation clearly indicates the unwinding of the inflationary spiral, which in itself is quite dangerous. However, it is not even this that is much more frightening, but the fact that the Federal Reserve System pretends that nothing is happening. During the last meeting of the Federal Open Market Commission, the possibility of such a development was not even discussed. As we can see, the markets are afraid that now the Federal Reserve has no choice but to urgently take some measures to contain inflation. The trouble is that both the markets and the economy are simply not ready for this. The Federal Reserve should have prepared everyone in advance for such steps. But so far, representatives of the Federal Reserve System have not even hinted at something like this. Ergo, fear was the only reason for the strong growth of the single European currency. However, these fears are not groundless.
Inflation (United States):
Just one look at the chart of the single European currency is enough to see that a certain rebound is obvious. Another thing is that the reason for growth is too strong. It is quite possible that today's data on industrial production in Europe will just be a great reason for this very rebound. After all, the growth rate of 0.1% should be replaced by a decline of as much as -2.0%. And even if industrial production, from the point of view of the markets, is a secondary indicator, this is quite enough for a small local correction. Its scale will be quite modest, but it will be enough to reduce tension.
Industrial production (Europe):
The EUR/USD currency pair showed quite high activity during the last trading day, as a result of which the side channel in the range of 1.1860/1.1920 was broken through on an upward trajectory.
The market dynamics after a weekly slowdown has moved to acceleration, where the speculative mood of market participants is visible to the naked eye.
If we proceed from the current location of the quote, we can see that there is an inertial upward trend in the market, where the overbought status has already appeared.
Considering the trading chart in general terms, the daily period, it is worth noting that the upward move from the pivot point of 1.1703 has acquired a scale of 260 points, which is quite a lot, and the psychological level of 1.2000 hangs over the quote.
In this situation, we can assume that the overbought status will lead to a slowdown in the inertial course and as a result to a stagnation-a pullback below the coordinate of 1.1950.
From the point of view of a comprehensive indicator analysis, it can be seen that the indicators of technical instruments unanimously signal a purchase due to a rapid upward movement.