FX.co ★ Trading plan for EUR/USD and GBP/USD on October 12

US producer prices grew higher than expected, hitting 2.2% instead of just 1.7%. The previous results also revised upward from 1.6% to 2.0%. However, considering that the index rose for three consecutive months, inflation in the region may surge again. Today's consumer price data will show this.

The rise in PPI also increases the likelihood of another interest rate hike by the end of this year.

Dollar increased as soon as the producer price index data came out, but then it returned to the levels before the publication due to the contents of the Fed minutes, which suggests that the central bank plans to keep interest rates at current levels until inflation stabilizes. However, as recent data show, this plan will likely undergo significant adjustments because despite the high level of interest rates, inflation climbs up again.

EUR/USD broke through the resistance level of 1.0600 during the upward trend, resulting in the correction extending. This indicates a local shift in trading interests. To continue the momentum, the pair needs to stay above 1.0650. Meanwhile, a gradual increase in dollar positions, supported by the news flow, will push the quote back to 1.0500.

GBP/USD followed the market and surged upwards. As a result, it almost reached the level of 1.2350, which traders consider a resistance. Breaking this could have a negative impact on long positions, as a rebound may follow. To extend the correction, the pair needs to stay above 1.2350, at least in the four-hour period.