empty
 
 

Forex Analysis & Reviews: Inflation in the European Union has decreased, what's next?
time 30.11.2022 05:34 PM
time Relevance up to, 01.12.2022 05:20 PM

The most significant and fascinating report today concerned inflation in the European Union. I had more of a tendency to think that the slowdown would be negligible or nonexistent. The ECB rate has only gone up by 2% so far, and when compared to rates in the US or UK, inflation did not even consider declining. A consumer price index decline might be brought on by specific market or seasonal factors, and we might witness another acceleration the following month. I want to draw attention to how much the cost of the same oil has decreased in recent weeks. Prices could stop rising if they became less expensive because oil would become more affordable on global markets. The fact that core inflation has not decreased at all partially supports my hypothesis.

If the EU experiences a new decline in inflation in December, we can infer that the period of the inflation rate's reversal movement to 2% has begun. It is still too soon to make such judgments. As for the euro and its prospects, I've already mentioned that my current thinking is more based on wave marking, which, despite having already started to get more complicated, still foretells the formation of a downward trend section. We, therefore, require an increase in the demand for the US dollar. With it, the wave markup will become more complex and unintelligible. The market paid little attention because the decline in inflation had no impact on the euro's value. If this supposition is true, the new tightening of the ECB's monetary policy in December also won't matter much because the market frequently anticipates the future change in interest rates just before the release of the inflation report, which indicates what the regulator will do. Naturally, this assessment has been true for the past year, when regulators have only increased rates as inflation has continued to rise.

This image is no longer relevant

The market's lack of response to EU inflation is a significant indicator that it does not intend to boost demand for the euro further. I might be mistaken in my assessment, but I am still waiting for something to come to mind. When significant data on the US labor market are released on Friday, we'll see what transpires, but something tells me that neither of those events will mark a "turning point." The US dollar can only expect a steady increase over the long term. In addition, the instrument will not be able to drop below price parity any time soon. Since the Fed is beginning to ease up on policy tightening, it is getting harder to wait for a strong dollar increase. The rise in the euro currency is completely pointless now that the ascending wave structure is complete. While in a constrained price range, the instrument can move over time with correction structures.

The upward trend section's construction is complete and has increased complexity to five waves. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. There is a chance that the upward section of the trend will become more complicated and take on an extended form, but this chance is currently at most 10%.

Chin Zhao,
Analytical expert of InstaForex
© 2007-2023
EURUSD
Euro vs US Dollar
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Start trade
Start trade

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST
  • Chancy Deposit
    Deposit your account with $3,000 and get $1000 more!
    In February we raffle $1000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
    JOIN CONTEST
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
    GET BONUS
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
    GET BONUS
  • 30% Bonus
    Receive a 30% bonus every time you top up your account
    GET BONUS

Recommended Stories

Commerzbank analysts and ECB officials do not expect a strong fall in the euro.

It's time to discuss the likelihood of a decrease now that the EUR/USD and GBP/USD pairs have been declining since last week. I'll make an effort to comprehend the issue

Chin Zhao 16:41 2023-02-07 UTC+2

Will EURUSD upward trend break?

Ignorance is not an excuse. No one—neither the Fed nor the financial markets—knows exactly with what time lag the tightening of monetary policy affects the economy. A miscalculation will

Marek Petkovich 15:23 2023-02-07 UTC+2

AUD/USD. The Reserve Bank of Australia increased the interest rate by 25 points

The Reserve Bank of Australia increased the interest rate by 25 basis points, or to 3.35%, as a result of the meeting's outcomes. This choice was anticipated, especially in light

Irina Manzenko 14:42 2023-02-07 UTC+2

EUR/USD: brief summary and near-term outlook

The dollar index (DXY) is retreating from the 4-week highs reached yesterday and at the beginning of today's European trading session, near the 103.67 mark: as of writing, DXY futures

Jurij Tolin 13:53 2023-02-07 UTC+2

Strong jobs report may spur Fed to raise interest rates even higher

Market participants are waiting for another speech by Fed Chair Jerome Powell, especially his comments on the recent labor market report. Federal Reserve Bank of Atlanta President Raphael Bostic said

Jakub Novak 12:34 2023-02-07 UTC+2

Markets will be feverish in the week ahead of US inflation data

Global markets continue to move down, reflecting the growing concern that the Fed will lose its optimism on the easing of inflation due to the strong labor market data. However

Pati Gani 12:07 2023-02-07 UTC+2

Japanese government stops yen from falling

Data shows that Japan intervened three times in the forex market last year to counter the historic plunge of yen. £5.6 trillion and £729.6 billion were spent on October

Irina Yanina 10:57 2023-02-07 UTC+2

Saudi Aramco raises oil prices after the earthquake in Turkey

WTI climbed above $75 a barrel after Saudi Aramco raised the price of its deliveries to Asia amid growing optimism about a sustained recovery in demand in China. Equity markets

Andrey Shevchenko 10:38 2023-02-07 UTC+2

Oil maintains bullish outlook

When everyone is selling, there is a great opportunity to buy. The strong U.S. employment statistics for January and the related strengthening of the U.S. dollar were good news

Marek Petkovich 09:44 2023-02-07 UTC+2

Collapsing house prices is about to become another problem for the Bank of England

Pound slumped due to the recent statements made by Bank of England representatives. Obviously, the latest interest rate hike was not enough, and the sharp reversal and soft tone

Jakub Novak 08:30 2023-02-07 UTC+2
Can't speak right now?
Ask your question in the chat.