Relevance up to 19:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
According to the most optimistic forecasts, inflation in the United States should have decreased from 9.1% to 8.7%. Whereas the main forecast was based on its stability. But in fact, everything turned out to be completely different, as inflation slowed to 8.5%, which was a complete surprise, which eventually led to a sharp weakening of the dollar. And the reason is incredibly simple - since inflation is slowing down much faster than expected, the Federal Reserve may well reduce the pace of interest rate hikes. The main idea now is that in September the refinancing rate will be increased by only 50 basis points, and not 75 as previously expected.
Inflation (United States):
The producer price index will be published today in the United States, which should not only confirm yesterday's inflation data, but also point to its further decline. The index may drop from 11.3% to 10.9%. Given that we are talking about a leading indicator for inflation, this will further convince the market that the US central bank will not raise interest rates so actively.
Producer Price Index (United States):
However, everything related to interest rates is nothing but speculation and assumptions. And it is far from a fact that the latest inflation data will seriously affect something. Almost immediately after the publication of inflation data, Neil Kashkari, head of the Federal Reserve Bank of Minneapolis, commented on this issue. And according to him, the slowdown in inflation does not change anything. And as soon as the market comprehends his words, the dollar will begin to strengthen again.
The British currency jumped in value by about 180 points against the US dollar in a speculative rally. As a result, the quote returned to the region of the local high of the current corrective move.
The technical instrument RSI H1 and H4, due to a speculative jump, turned out to be within the overbought zone, which indicated an overheating of long positions. At this time, the RSI D1 indicator crossed the middle line 50 from the bottom up, which again indicated a signal about a change in trading interests.
The MA moving lines on the Alligator H4 indicator have changed direction from the bottom up, which is in line with the recent price momentum. Alligator D1 has intersections between the MA lines, this signal indicates a slowdown in the downtrend.
On the trading chart of the daily period, there is a corrective move in the structure of the downward trend. There is no signal of a change in the medium-term trend.
Expectations and prospects
The price area 1.2250/1.2300 became resistance on the way of speculators, where there was a reduction in the volume of long positions. Due to the local overbought of the pound sterling in the short term, a rollback occurred on the market. In this situation, the level of 1.2155 can serve as a variable support, where the quote may come during a rollback.
The upward scenario will be considered by traders after the regrouping of trading forces, in the form of a rollback. The primary signal to buy the pound may occur if the price returns above 1.2250.
Complex indicator analysis in the short-term and intraday periods has a sell signal due to the rollback stage. Indicators in the medium term have a variable signal, due to a slowdown in the downtrend.
