FX.co ★ 10.08.2022: US inflation may stop rising. How this fact may influence European currencies?

10.08.2022: US inflation may stop rising. How this fact may influence European currencies?

Today, in the first part of the day, the currency market stagnated in a quite narrow range. Although the macroeconomic calendar has been absolutely empty for two days already, the situation was mainly caused by the expectations of the US inflation figures. Notably, forecasts are really positive. In the worst-case scenario, the US inflation will remain at the same level of 9.1%. It will stop rising, providing traders with positive signals. Some economists suppose that the inflation rate may even drop to 8.7%. In any case, economic risks will become lower. Even if the main prediction comes true and inflation remains unchanged, the US dollar will receive a strong reason to rise. However, traders remain cautious since recently, forecasts about inflation rarely meet reality. In other words, the indicator continues rising despite promising predictions. That is why the market is likely to be stagnant until the publication of the report. Meanwhile, the euro/dollar pair slackened its upward movement near the local high recorded on August 4. This level corresponds to the upper limit of the range. As a result, the volume of long positions declined, thus causing a drop in the pair. The price has already bounced off the upper limit of the range of 1.0250/1.0270. The volume of short positions may increase, if the price settles below 1.0200. In this case, the pair may start sliding to the lower limit of the range at 1.0150. The alternative scenario will become possible if the price returns to 1.0250. This will provide buyers of the euro with a chance to move towards 1.0270/1.0280. Considerable changes will take place if the price settles beyond either control level. If the pair exceeds 1.0300, it is likely to go on gaining in value. In case of a decline below 1.0100, the price will approach the parity level. Notably, the signal should be proved on the four-hour chart.Yesterday, the pound/dollar pair was hovering within the range of 1.2060/1.2135 showing mixed activity. The fact points to the accumulation process, which may lead to acceleration. It is quite possible that the current stagnation will end soon. This, in turn, may boost speculative activity, thus spurring local price swings. Signal levels are located at 1.2050/1.2155. The price settlement beyond either limit on the four-hour chart will point to a future trend.


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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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