FX.co ★ Hot forecast for EUR/USD on 14/04/2022

The single European currency showed a rather unexpected growth yesterday. Although it was insignificant, nonetheless. Moreover, the producer price index in the United States rose from 10.3% to 11.2%. But just a day earlier, a stronger than expected increase in inflation in the United States led to a rise in the dollar, as it finally convinced everyone that the Federal Reserve would actively raise the refinancing rate. The producer price index is a leading indicator for inflation, so it will continue to grow. Therefore, it is quite possible that by the end of this year the refinancing rate will be raised as much as 3.0%.

Producer Price Index (United States):

But the fact is that simultaneously with the release of these data, new forecasts for inflation in the UK were published. The Bank of England expects inflation to peak just in April, stopping at 7.2%. After that, it will gradually decrease. But investment banks think otherwise, and in their opinion, inflation will accelerate to 9.0%, which is quite different from the forecast of the Bank of England. Given the current inflationary dynamics, the forecast from the banking sector seems more realistic. And in this case, the Bank of England will have to react somehow. Of course, we are talking about a further increase in the refinancing rate. This was the reason for the pound's growth, which has already pulled the euro. This is clearly seen by the fact that the pound grew more actively than the euro.

Data on retail sales in the United States will be published today, the growth rate of which may slow down from 17.6% to 11.0%. However, this news will be ignored in principle, since European Central Bank President Christine Lagarde's press conference will begin at the same time. The main event of the day is the meeting of the Board of the ECB. Interest rates, of course, will remain unchanged, as will all other parameters of the monetary policy pursued by the central bank. Only subsequent comments are of interest. If, as before, nothing is said about plans to raise the refinancing rate, then the dollar will resume its growth. But if Lagarde at least hints at the possibility of an increase in interest rates before the end of this year, then in this case the euro will begin to grow actively.

Retail Sales (United States):

The EURUSD currency pair, after the control convergence with the support level of 1.0800, the volume of short positions has sharply decreased. This led to a local stagnation, and then to a price rebound by about 100 points. A comparative analysis of the two trading instruments EURUSD and GBPUSD showed the possibility of a positive correlation, where due to the sharp strengthening of the British currency, there could be a rush to buy the euro.

The technical instrument RSI H4 crossed the 50 middle line during the strengthening of the euro. This signal indicates a corrective move.

The Alligator H4 indicator has a primary intersection between the moving lines, which also allows for a corrective move. Alligator D1 indicates a downward trend, MA moving lines are directed to the downside.

Expectations and prospects:

In this situation, much will depend on the external background, in particular, the results of the ECB meeting. As for the technical levels, the 1.0940 coordinate variable on the bulls' way, which can play the role of resistance if the hype for long positions subsides. If the price stays above 1.0950, it is highly likely that the correction will continue to form towards the psychological level of 1.1000.

Complex indicator analysis gives a signal to buy in the short-term and intraday periods due to the rapid growth of the euro. Indicators in the medium term have a sell signal due to a downward trend.