Despite the good data yesterday on the US economy and the very positive outlook for the rate of interest rate increases in the US this year, the US dollar continued to decline against the European currency amid growing concerns about a weak report on the growth of the consumer price index in the US earlier this year.

According to the National Federation of Independent Business, in January this year, the index of economic expectations of small companies in the US has grown significantly, reaching a historic high.

So, the US small business index in January compared with December 2017 increased by 2 points and amounted to 106.9 points. Economists had expected that in January, the index would be 106 points.

The speech by the President of the Federal Reserve Bank of Cleveland, Loretta Mester, did not affect the US dollar.

Mester said that the Fed should raise rates in 2018 at the same rate as in 2017, as a gradual increase in rates helps maintain a balance in the economy.

In her opinion, recent market fluctuations did not affect the prospects for the economy, as it is in excellent condition. Mester expects US GDP growth of about 2.5% in 2018, while, according to her forecasts, inflation will return to 2% in the next one or two years.

It is worth noting that yesterday, the White House nominated and is considering the candidacy of FRS President Cleveland Loretta Mester for the post of vice chairman of the Fed.

As I noted above, all attention today will be focused on the release of data on inflation in the US in January this year. Depending on what indicators will be published, it will be possible to make a forecast on the pace and timing of the Federal Reserve in raising interest rates earlier this year. It is expected that the base consumer price index will be 0.4%, while the consensus forecast assumes 0.2%. Good data will lead to an increase in the US dollar, which will allow him to win back a number of positions against other currencies.

Despite this, it is unlikely that the demand for safe havens will change dramatically.

As for the technical outlook for the EUR / USD pair, the breakthrough of resistance 1.2410 will lead to further growth of risky assets with a gradual exit already to the highs of February around the level of 1.2470 and 1.2520. If inflation data in the US surpass forecasts of economists, a return to the level of 1.2440 could put some pressure on EUR / USD pair, which will lead to a test of larger support levels of 1.2300 and 1.2260.

The British pound yesterday ignored inflation data, as, on the one hand, annual growth rates remained the same, while in comparison with December 2017, inflation declined.

According to the data, in January 2018, compared to the same period last year, consumer prices in the UK rose by 3%. Compared to December 2017, consumer prices fell by -0.5%, which completely coincided with the forecasts of economists. On an annual basis, economists expected inflation to slow to 2.9% from 3% in December.