Yesterday, the US published its producer price data that brought a slight hope for a smaller than expected rise in the US inflation. Such a prospect allows the US dollar to gain in value.
Notably, the greenback is just inching up. This could be explained by the fact that influence from the PPI data on consumer prices is very small. In addition, we will see the result only some time later. In other words, inflation may slacken only in one or two months. Nevertheless, the US dollar has already received support. However, economists will hardly revise forecasts for today’s report. That is why we still expect that inflation will increase to 5.7% from 5.4%. It is one of the most optimistic forecasts. Some analysts foresee acceleration to 5.8%.
It is obvious that a significant jump in inflation threatens further economic growth. It will also have a negative influence on the greenback. Notably, a fall in the US dollar could be capped by the unemployment claims data. The fact is that the number of first time claims may slide by 5 thousand, whereas the number of continuing claims is expected to drop by 54 thousand. Further improvement of the labor market condition will offset the impact from the inflation growth.

Let us take a look at the trading charts. The euro/dollar pair finished its correctional movement from the local low recorded in 2021 near the resistance area slightly above 1.1600. Some time later, the volume of long positions dropped and the price stagnated between the levels of 1.1570 and 1.1605.
At the beginning of the European session, the euro/dollar pair broke the lower limit of the range. This proves that the US dollar is recovering after the recent drop. The euro/dollar pair may decline to new local lows. Otherwise, the quote is likely to resume trading within the broken range.

Meanwhile, the pound sterling hit the resistance level of 1.3600. After that, the volume of short positions decreased. This, in turn, led to a drop and then to stagnation.
On the trading chart, we see an accumulation process. A signal to open short positions is located at 1.3520. Long positions could be initiated if the price hits 1.3605 and resumes its correctional movement.



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