13.10.2020: USD may jump amid US inflation data. Outlook for EUR/USD and GBP/USD

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Market showed a tepid reaction to the weak labor market data from the UK. Thus, the UK unemployment rate advanced to 4.5% from 4.1% whereas economists had expected a rise to 4.2%.
At the same time, the number of employed people tumbled by 153 thousand beating the forecast of a decline of 30 thousand. Notably, the indicator has been falling for four months in a row. During this time, the UK economy has shed 511 thousand jobs that is a considerable change for the country.
However, the number of unemployment claims increased just by 28 thousand instead of 72 thousand. The fact is that the reports on unemployment rate and employment reflect the labor market situation in August and the claimant count data was published for September. Nevertheless, such figures point to a further rise in unemployment.
At the same time, such a poor reaction could be caused by the fact that most investors are looking forward to the US inflation data that will be disclosed later today. The indicator is expected to advance to 1.5% from 1.3%. As a rule, markets show a positive reaction to the indicator’s climb. In this case, the US inflation is not just rising, it is approaching the Fed’s targeted level of 2.0%. It means that unlike the Bank of England and the ECB, the US Fed will hardly switch to looser monetary policy. It does not mean that the regulator is planning to tighten its policy or raise the key rates. Nevertheless, big investors could see their income jump. Thus, the US dollar has all chances to gain in value amid higher interest.
Yesterday, the euro/dollar pair failed to hit the local high of 1.1830 and dropped to 1.1800. Even after a break, the middle level of 1.1810 is weighing on market participants. That is why analysts suppose that the price may resume falling. The correctional movement from the low of 1.1612 has significantly changed the structure of the downward movement from 1.2010 to 1.1612. The fact is that the price consolidation above 1.1830 reflects the recovery of 55% after a slump logged in September. This, in turn, could lead to a resumption of the mid-term uptrend.
On the trading chart, we can see that at the beginning of the European session, the euro/dollar pair fixed below 1.1800. This may have a positive influence on short positions. In other words, sellers are taking the market under control.
We should also take into account that the speculative activity is still very high.
If the price fixes below 1.1800, it may reach the levels of 1.1750-1.1700. According to the alternative scenario, the price may consolidate above 1.1830 amid a surge in the speculative activity.
At the same time, the pound/dollar pair managed to hit a new local high of October. After that, it returned to the levels near the psychological level of 1.3000. Traders are still focused on the area of 1.2950/1.3050.
According to the trading chart, market participants are concentrated above the psychological level of 1.3000. Moreover, the pair has formed a range between the levels of 1.3000/1.3080. A slowdown logged yesterday may boost trading activity that could result in a break of the mentioned limits.
Thus, buy deals could be opened above 1.3090 with the targeted level at 1.3120-1.3165.
Sell deals could be initiated below 1.3000 with the target at 1.2950.

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