The single European currency is behaving as it should, and since the bad macroeconomic data for the United States came out, it is growing. Indeed, as soon as it became known that the growth rate of producer prices in the United States accelerated from 2.8% to 4.2%, the single European currency began to rise. However, the scale of growth clearly did not match the data. After all, the producer price index has jumped sharply, which means that inflation in the United States will grow rapidly. But the Federal Reserve continues to pretend that there are no inflationary risks, and it turns out that this topic was not even discussed during the last meeting of the Federal Open Market Commission. Formally, there is no reason to worry, since inflation is still below the target level, and according to the latest data, it is not growing so fast. However, the dynamics of producer prices in the last couple of months clearly indicate that the growth of inflation can clearly accelerate. Despite this, the Federal Reserve System continues to ignore the situation. This was the reason for the strengthening of the single European currency. But the scale of growth is so modest that it is worth examining it through a microscope.
Producer Price Index (United States):
It is also noteworthy that before the publication of data on producer prices, and some time after, the single European currency slowly decreased. Thus, a constant feed of positive news is necessary for it to show strong growth. Otherwise, we will see its gradual decline. And it seems that today's retail sales data will only give the single European currency a little bit of optimism for a while. The rate of decline in retail sales should slow down from -6.4% to -5.4%. Combined with rising inflation, this is a pretty good combination, since companies' profits are growing, which means they can start hiring more employees, which will lead to a long-awaited reduction in the unemployment rate. However, given the fact that the single European currency is likely to decline against an empty news background, this portion of optimism will last only for a short while. And the scale of growth seems to be quite modest.
Retail Sales (Europe):
The EUR/USD currency pair failed to show activity last Friday, which resulted in a slowdown and, as a result, an amplitude movement of the price in the range of 1.1860/1.1920, followed by a compression to 1.1880/1.1905.
The market dynamics have signs of slowing down, but it is worth considering that speculative activity from time to time manifests itself in the market, which makes it possible for intraday traders to earn money.
If we proceed from the current location of the quote, we can see that market participants continue to follow within the limits of the amplitude fluctuation, where the compression process can lead to an acceleration in the market.
Considering the trading chart in general terms, the daily period, it is worth noting that the upward move from the base point of 1.1703 has a scale of more than 200 points, but this does not yet lead to a violation of the integrity of the corrective movement from the peak of the medium-term trend.
In this situation, we can assume that the compression limits of the amplitude of 1.1880/1.1905 will serve as a lever for speculators, which will lead to a local acceleration towards the main limits of 1.1860/1.1920.
Concretizing all of the above into trading signals:
- Long positions can be considered if the price is fixed higher than 1.1905, with the prospect of a move to 1,1920.
- Short positions can be considered if the price is fixed lower than 1.1880, with the prospect of a move to 1.1865.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments in the minute and hourly intervals have an unstable signal, buy/sell, due to the price movement within the limits of a narrow amplitude.
*Účelem zde zveřejněné analýzy trhu je zvýšení vašeho povědomí, nikoli dávání pokynů k obchodování.
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