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13.10.2021: USD may rise amid US inflation report. Outlook for EUR/USD and GBP/USD

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There are new signals that the Bank of England may raise the key interest rate earlier than expected. Although the growth in the UK industrial production has slackened, the final data exceeded the forecast. This, in turn, allowed the pound sterling to gain in value.
Analysts had expected a slowdown to 3.2% from 3.8%. In fact, industrial production advanced by 3.7%. In addition, the previous figures were upwardly revised to 4.4%. This reflects that the UK economy is recovering faster than expected. On a monthly basis, industrial production increased by 0.8%, whereas analysts had foreseen a smaller rise of just 0.4%.
In the eurozone, the situation is almost the same. The previous industrial production data was also upwardly revised to 8.0% from 7.7%. However, the current report unveiled weaker than expected figures. Thus, the indicator advanced just by 5.1%. It means that on a monthly basis industrial production declined by 1.6% instead of a drop of 1.2%. As a result, the euro remained stagnant.
Nevertheless, at the beginning of the US trade, the greenback is likely to resume growing. The fact is that the market has long been preparing for changes in the monetary policy. However, judging by the US dollar growth pace and a decline in the US stock indices, investors still hope that the monetary policy tightening will begin in December instead of November. However, the labor market condition points to the fact that the QE tapering will be launched as early as November. Only a drop in the inflation rate may force the Fed to postpone the reversal of the QE program until December or even until next year. However, analysts suppose that inflation will remain unchanged. In this case, there will be no doubts that in November, the US dollar supply will slump. In other words, the inflation report is likely to settle the issue and lead to a further rise in the greenback.
Let us take a look at the trading charts.
The euro/dollar pair managed to renew the local low of 1.1529 logged on October 6. However, it failed to fix below it. As a result, the volume of short positions dropped and the price rebounded. Although the euro is significantly overbought, the bearish sentiment still prevails in the market. Since the beginning of the autumn, the euro has lost over 3% against the US dollar.
Despite a technical rebound, the downtrend is still intact. If the price falls below 1.1520, the volume of short positions is likely to jump. In this case, the price may slide to the support level of 1.1420.
According to the alternative scenario, the pair may show a fully-fledged correction. However, at first, it needs to consolidate above 1.1600. This, in turn, will allow the price to climb to the local peak logged on October 4.
At the same time, the pound/dollar pair entered a sideways channel after the correction. It has been trading between the levels of 1.3540 and 1.3670 for a week already. The price is rebounding from one limit after another. This may result in a new accumulation process.
The long fluctuation within the sideways channel may lead to acceleration at the moment of a break of either limit. (1.3540 / 1.3670).
Thus, if the predictions come true, traders are better to apply the breakout strategy.
00:00 Intro
00:22 UK Industrial Production
00:55 Eurozone Industrial Production
02:35 EUR/USD
03:34 GBP/USD

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