FX.co ★ EUR/USD. December 11. Results of the day. Traders ignore accelerated US inflation and accusations against Donald Trump

4-hour timeframe

Amplitude of the last 5 days (high-low): 49p - 31p - 70p - 25p - 35p.

Average volatility over the past 5 days: 42p (average).

The EUR/USD currency pair corrected as part of an upward trend to the Kijun-sen critical line on Wednesday, December 11, rebounded from it and is now trying to resume upward movement. However, a downward reversal could occur near the upper Bollinger band, because there is no upward trend as such, it is now identified as such only thanks to the Golden Cross from the Ichimoku indicator. Thus, we can only once again note the weakness of the bulls, the reluctance of the bears and the weak volatility of the currency pair. It seems that everything is returning to that paradoxical situation that we described a few weeks ago. This scenario is also supported by the complete disregard for macroeconomic statistics from the United States and the European Union. Today, only one report was published, but which one. US Consumer Price Index. Over the past six months, inflation in the United States has slowed down to 1.7% YOY, which made some traders and investors nervous, however, three consecutive rate cuts by the US Federal Reserve evened out the US data, all indicators confidently crawled up, inflation is no exception. According to a report by the Bureau of Labor Statistics, inflation in November rose to 2.1% YOY, and also added 0.3% in monthly terms. Forecasts were lower, and in itself the excess of the Fed's target inflation rate (2.0%) is a very positive factor for the United States, its economy, and the dollar. At least at first glance. In reality, traders did not believe that accelerating inflation deserves the opening of new sales of the euro/dollar pair. We believe that this is an absolutely illogical reaction of traders, since inflation is one of the most important and significant indicators of the state of any economy. It is inflation that has the strongest effect on monetary policy. And if its acceleration does not provoke a reaction of market participants, then something on the market is not in order. Only one can be out of order. Bears still do not see sufficient reasons for buying the US currency around its two summer highs (lows for the euro and the EUR/USD pair). Therefore, the market does not want to use the macroeconomic statistics, which is in favor of the US dollar. Macroeconomic statistics, which are in favor of the euro currency ... is gone. Or at least there are very few. Thus, the bulls of the euro/dollar pair have no fundamental reason to buy.

In the evening, we are still waiting for the publication of the results of the Fed meeting, the announcement of the decision on the rate, a press conference by Jerome Powell, as well as the announcement of forecasts of the main macroeconomic indicators for the next reporting periods. As we all already know, the rate will remain unchanged, forecasts of GDP, inflation and other indicators may increase compared to the previous Fed meeting, and Jerome Powell's rhetoric can be full of theses about "strong economy and labor market", "good growth rates" and the "danger of trade wars." That is, we do not expect hints from the Fed chief over a hike or reduction on the key rate. Consequently, with a probability of 90%, his rhetoric will likely be neutral and formal. Accordingly, it will also not cause any reaction among market participants, unless Powell presents a surprise. And if so, then the volatility can remain at the same "low" level today, even if there are enough macroeconomic data today.

Meanwhile, the U.S. House of Representatives voiced allegations against Donald Trump. The US president is accused of abuse of power and obstruction of Congress. A statement was made by Chairman of the Judicial Committee Jerold Nadler. Thus, now the charges have gained official status. Both charges against Trump are connected with Ukraine. The first charge alleges that President Trump delayed military assistance to Ukraine and put pressure on its president, Vladimir Zelensky, demanding that an investigation be launched into his main rival in the 2020 election, Joe Biden and his son. The second charge is related to the obstruction of the US Congress during the investigation of Trump's actions. According to the prosecution, Trump "undermined the integrity of the 2020 elections and jeopardized the country's national security." "No one, not even the president, can be above the law," Nadler emphasized. Thus, the clouds around Trump are gathering, and even if it doesn't reach impeachment, the victory in the 2020 presidential election, which Trump so wants, is floating out of his hands.

From a technical point of view, the pair may continue the upward movement, however, what will be the reaction of traders to the evening neutral meeting of the Fed, and whether it will be generally difficult to predict now. We believe that volatility will remain low, and no particularly strong reaction will follow at all. Based on this, we do not expect to see today or tomorrow a strong growth of the European currency.

Trading recommendations:

The EUR/USD pair is trying to resume the upward trend, but the chances of this are extremely small. Today it is extremely difficult to assume a continued upward movement, given that the MACD has turned down, the results of the FOMC meeting will most likely be neutral, and the bulls remain extremely weak. But sales of the euro/dollar pair will become relevant no earlier than breaking the critical line with a target of 1.1050 and only small lots.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.