FX.co ★ US Treasury calls for joint effort to fight inflation

US Treasury Secretary Janet Yellen called on key central banks to continue the fight against inflation, pointing out the problems that await the global economy in the future.

Yellen previously headed the Federal Reserve and was forced to change the course of policy in response to global changes in the world economy. Her comments now coincide with the proposed reforms by the World Bank and regional development banks, as well as with the views of several Fed representatives.

Fed Vice Chair Lael Brainard also said recently that they won't shy away from tighter policy, but warned that there is a need to look at the spillovers that could have a negative impact on the financial system as interest rates rise. These words were perceived by investors as a signal for a softer policy next year, which provoked the weakening of dollar and a rally in the stock markets.

In the futures market, expectations were revised even though most politicians tried to convince market participants that no one is going to loosen their grip and only the most effective fight against inflation is ahead.

Talking about EUR/USD, a lot depends on 0.9810 because a break above it will lead to a rise to 0.9840 and 0.9880. Meanwhile, a fall below 0.9760 will ramp up pressure, which will result in a further decline to 0.9725, 0.9680 and 0.9640.

In GBP/USD, a lot depends on 1.1190 because its breakdown will lead to a rise to 1.1250 and 1.1310. A fall below 1.1115, meanwhile, will result in a drop to 1.1030 and 1.0950.