At yesterday's trading, the US dollar was under selling pressure. The main factor in such a negative dynamics of the US currency was the comments of the chairman of the US Federal Reserve System (FRS) Jerome Powell. The essence of these comments was that the world's leading economy has not yet reached the state that will allow the US regulator to take a course to tighten monetary policy. Given that in previous comments, the Fed leaders and Powell personally were pleased with the pace of economic recovery after COVID-19, we can conclude that the Fed continues to be cautious. Well, this is quite in the spirit of the most powerful world Central Bank (CB). It is also characteristic that these comments of the head of the Federal Reserve appeared the day after the publication of the consumer price index in the United States, which reached the highest value in the last thirteen years. Nevertheless, this did not impress the Fed's leadership, which still considers such high inflation a temporary phenomenon, since the economic recovery began after the pandemic.
As a result, we heard the already painfully familiar statement that the regulator will support the economy until its full recovery. In other words, for those who expect an early tightening of monetary policy in the United States, it's time to finally take a look at the situation based on the comments of the Fed. The rate increase in the United States will not take place soon. However, it is likely to begin after all. In this perspective, the US dollar has got into a rather delicate situation. On the one hand, the markets are already ready to put the beginning of monetary policy tightening in the value of the US currency. On the other hand, it is unclear when exactly this will happen, and in my personal opinion, it is not entirely appropriate to start playing out events that we are likely to witness only in 2023. You never know what changes in the world economy, and the world in two years. The most recent and obvious example of this was the COVID-19 pandemic, which, of course, is still too early to talk about a complete victory over.
Now, let us briefly talk about today's statistics. At 10:00 London time, reports on industrial production will be received from the eurozone, and at 13:30 (London time), data on the producer price index will be received from the United States. Well, now we turn to the consideration of the price charts of the EUR/USD currency pair.
As expected the day before, one candle closed under the support level of 1.1782 and the most important technical and psychological mark of 1.1800 may not be enough to consider the breakdown of both levels true. Yesterday's trading once again confirmed the correctness of this judgment. As a result of the growth, the euro/dollar pair returned above 1.1782, 1.1800, and ended the Wednesday session at 1.1835. Another important technical point was the closing of yesterday's trading above the red line of the Tenkan Ichimoku indicator. What trading ideas can I offer for today? Of course, this is an interesting question. Given the uncertain nature of trading on EUR/USD, it is worth considering both positioning options. It is better to consider the next sales after the rise to the price zone of 1.1860-1.1900, and above from the price area of 1.1910-1.1955. About purchases, I recommend waiting for a decline in the price zone of 1.1830-1.1815, after which you should think about buying the pair. With any of the listed positioning options, it is better to see confirmation signals, and then open positions with small targets up to 45-50 points.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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