There are growing concerns among investors about the possibility of a repeat of the European scenario in the United States, when inflation starts to rise suddenly and strongly and consumer activity falls sharply. So Janet Yellen had to urgently calm the markets and assure everyone that inflationary risks are rather weak, and most importantly, manageable. And we must admit that the words of the Secretary of the Treasury of the United States had an effect, since the foreign exchange market then went into a clear horizontal movement.
The data on producer prices, published on Friday, somewhat frightened market participants, as their growth rates accelerated from 1.7% to 2.8%. Whereas even the most daring forecasts spoke of an increase of up to 2.2%. If we remember that producer prices are a leading indicator for inflation, then we can come to the conclusion about the possibility of a significant increase in inflation. Much more than expected. The kind for which no one is ready for. Most importantly, consumers may not be ready for it. Moreover, a slowdown in the growth rate of retail sales is expected anyway. Certainly not the same as in Europe, but still. The dollar began to show a weakening trend after these reports were released.
Producer Price Index (United States):
The euro has been falling since the European session opened, and it only stopped doing so after the industrial production report was released, which finally showed growth. The decline in production by -0.2% was replaced by a 0.1% growth. Naturally on an annualized basis. Probably the most important thing here is that the European industry has shown growth for the first time since October 2018. However, this was not enough to fuel the euro's growth.
Industrial production (Europe):
The EURUSD pair found a pivot point within the 1.1915 area, where there was a slowdown and, as a result, a 50-point rollback, while downward interest was maintained among traders.
Market dynamics are average, which is sufficient for periodic impulses during the day.
If we proceed from the quote's current location, then we have a recovery move relative to the pullback, where the market stagnation played as an acceleration within the boundaries of 1.1945/1.1960.
Considering the trading chart in general terms, the daily period, we could see that, as before, there is a corrective move from the peak of the medium-term trend in the structure of which the 1.2349 -> 1.1835 moves.
In this situation, we can assume that market participants will try to return to the area of the periodic support on Friday (1.1915), where the next move in the market will be clear relative to this coordinate. In case the price does not settle below 1.1905 in a four-hour period, fluctuation within 1.1915/1.1950 is not excluded.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments have a sell signal due to the quote's movement in the correction structure.