Yesterday, market participants were looking forward to the publication of the US consumer price index, which is the main indicator of inflationary pressure in the country. In the current conditions of recovery of the American and world economy from the COVID-19 pandemic, in several countries, including the United States, inflation shows jumps above the Fed's target level of 2%. Federal Reserve officials themselves still consider this factor temporary and link it to the imbalance of supply and demand, which often occurs during periods of active economic recovery after a particular crisis. Yesterday's data on consumer prices in the United States turned out to be mixed. Thus, the consumer price index in monthly terms increased by 0.5%, coinciding with economists' forecasts. But the base value of the index was only 0.3%, while expectations were reduced to an increase of 0.4%. As for the growth of consumer prices on an annualized basis, it turned out to be at the level of 5.4%, although expectations were reduced to an increase of 5.3%. The basic value of the consumer price index was 4.3%, which fully reflected the forecast values of this indicator. If we summarize yesterday's data on consumer prices in the United States, then the Fed's forecasts about the temporary factor of their growth are gradually beginning to be justified. It means that inflation will soon return to the Fed's target of 2%. In this regard, the leadership of the US Central Bank will have much fewer grounds and reasons for tightening its monetary policy.
If we touch on today's events that may affect the price dynamics of the main currency pair of the Forex market, they may be data from the eurozone on industrial production, which will be published at 10:00 London time. The block of macroeconomic statistics from the United States will be released at 13:30 (London time). Here, it is worth paying attention to initial applications for unemployment benefits and changes in producer prices.
Daily
Turning to consider the technical picture for EUR/USD, I would like to immediately note what has been repeatedly mentioned in previous articles on this trading instrument. Of course, we are talking about a strong historical and technical price zone of 1.1750-1.1700. As expected, such a strong and important price area for the market is unlikely to pass the first time. At yesterday's auction, this is what happened. The euro/dollar pair turned to recover and ended trading on August 11, increasing at the level of 1.1738. Can yesterday's daily bullish candle be considered a reversal?
On the one hand, yes, because yesterday's trades closed above the opening price of the previous ones. On the other hand, there is no obvious bullish takeover factor. A lot will depend on the mood of trading participants and incoming macroeconomic statistics from the eurozone and the United States. Turning to trade recommendations, I will immediately emphasize that there are no clear trading ideas. In my opinion, there are still opportunities for both purchases and sales. And yet, yesterday's growth of the pair is more likely to be a rebound or a corrective pullback from the strong price zone of 1.1750-1.1700. I propose the following trading plan based on an hourly chart.
H1
If the pair returns above the broken support of 1.1752 and is fixed above this level with three candles in a row, you can try to buy the euro/dollar on a rollback to it. If the bears on the instrument manage to push through the most important level of 1.1700 and gain a foothold under it, we are looking for opportunities to open sales on a pullback to the price zone of 1.1700-1.1750. At the same time, in both cases, it is better to enlist the support of confirming signals of Japanese candlesticks on this or four-hour charts.