US politicians continue to exert a strong influence on the markets. We can even say that the price movements currently depend on what is happening in Capitol Hill. And this influence clearly does not benefit the dollar, which started to fall as soon as Congress passed a resolution calling on Vice President Mike Pence to apply the 25th Amendment to the Constitution and remove Donald Trump from power. To Mike Pence's own credit, he refused to follow the Democrats' insistence, politely referring to the fact that eight days before the inauguration of Joseph Biden, such a step is not only unnecessary, but also harmful. In general, Pence acted as the herald of common sense and prudence. But the Democrats are so keen on persecuting their political opponents that they now intend to once again try to impeach Trump, and today a debate on this issue is planned in Congress. The vote will take place tomorrow. But given the fact that Trump is already leaving the White House in a week, the Democrats' persistent attempts to carry out impeachment still look like the persecution of political opponents after they lost power. This behavior is typical for developing countries, but not for a country that is the ancestor of modern democracy. The most important thing is that this does not affect the safety and security of capital and investments. So it is not surprising that the dollar is getting cheaper. Another thing is that investors still react to everything situationally, that is, when specific steps are taken. After all, it's hard to get used to the idea that the rules of the game, which have been unchanged for the last century, can somehow change in the United States. After all, the United States acted as a guarantor of the security of investment and capital after the end of the First World War. Big business has long been used to this. And it is very, very difficult to give up old habits.
Unfortunately, this political circus crowds out the real state of affairs in the economy, so investors are unlikely to pay attention to macroeconomic statistics now. But a lot of interesting and rather important macroeconomic data will be published today. For example, data on industrial production in Europe, the rate of decline of which should slow down from -3.8% to -3.2%. Of course, this is a positive factor, and in itself should contribute to strengthening the euro. But it's already grown quite well due to the reckless behavior of representatives of the Democratic Party.
Industrial production (Europe):
But the main economic news of the day will be the US inflation report. Moreover, according to the most conservative forecasts, it will remain unchanged. And there is a possibility that the growth rate of consumer prices will accelerate from 1.2% to 1.3%. The rise in inflation is perceived by investors as an extremely positive factor, since it guarantees a return on investment. In other words, inflation data should be an excellent reason to strengthen the dollar. However, the market is more concerned with what is happening in Congress, since it could have much more serious consequences in the long term.
Inflation (United States):
The EURUSD pair, moving along the trajectory of the correction from the local high of the medium-term upward trend of 1.2349, reached the support level of 1.2130, where a slowdown and rebound occurred, returning us to the 1.2220 level.
Such a high activity, caused by a toxic information background, leads to an increase in speculative transactions, which causes market volatility to rise.
If we proceed from the quote's current location, then we can see a slight stagnation in the boundaries of 1.2200/1.2220, where the accumulation process is likely going on, which will lead to new speculative leaps in the market.
Considering the trading chart in general terms, the daily period, it is worth highlighting that the market has been dominated by upward interest for a long time, as a result of which a medium-term upward trend was set.
We can assume that the conditional boundaries of stagnation at 1.2200/1.2220 will serve as a starting point in a new round of speculative positions, where one should work according to the breakout principle.
Let's specify the trading signals:
You are advised to buy the pair when it is higher than 1.2220, with the prospect of it reaching 1.2275.
You are advised to sell the pair when it is below 1.2200, with the prospect of it reaching 1.2150.
From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments on the minute and hourly intervals signal a buy, due to a pullback from the support level of 1.2130.