Absolutely everything pointed to the fact that the dollar should become more expensive, and quite seriously. However, instead, the dollar only lost its positions all throughout Wednesday. At the same time, apart from macroeconomic statistics, there was nothing serious yesterday. Apparently, investors are not yet morally prepared to conduct a full-fledged correction, which has been brewing for a very, very long time.
Although it is possible that yesterday we observed a banal speculative movement. The only problem is that this threatens a sharp and rapid collapse of the single European currency in the near future. So do not regard the dollar’s weakening from yesterday as a certain pattern. This is an anomaly with serious consequences.
The euro would stop growing sometimes. For example, this was due to industrial production, the data which came out slightly worse than forecasted. The decline in industrial production was expected to slow from -20.4% to -12.0%. But they slowed down to -12.3%. The difference, of course, is not significant, but the market is reasoning precisely by deviations from the forecasts.
Industrial production (Europe):
But the most interesting thing happened during the US session, when inflation data was published, which surpassed all the wildest expectations. Even after the data on producer prices was released, there were suspicions that inflation would rise slightly more than expected. But everything turned out to be even better.
Inflation, which was supposed to rise from 0.6% to 0.7%, accelerated to 1.0%. But, as already mentioned, the most surprising thing is that this did not strengthen the US dollar. Although it should be noted that the dollar was showing attempts to grow when this data was released. But they turned out to be short-lived, and as a result, the dollar still continued to lose its positions.
Inflation (United States):
Obviously, investors do not really believe in the prospects for the dollar and the American economy, which means it is highly likely that today’s data on applications for unemployment benefits will not provide too much help. Although the number of initial applications should decrease from 1,186,000 to 1,150,000. The number of repeated applications may decrease from 16,107,000 to 15,800,000.
And yes, unemployment continues to remain at an incredibly high level, but the very trend towards its reduction causes optimism. But, apparently, not from market participants. Nevertheless, the most likely scenario is strengthening the dollar. But it is better not to rush and act according to the circumstances in the current conditions.
Number of initial claims for unemployment benefits (United States):
The euro/dollar pair once again found a foothold in the area of 1.1700/1.1720, where an upward move appeared on a natural basis, returning the quote to the 1.1800 mark. A consistent price fluctuation led to forming a side channel of 1.1700/1.1900, where the quote has been located for more than two weeks. Relative to market volatility, high daily indicators are recorded, which indicates the prevailing speculative interest.
Looking at the chart in general terms (the daily period), you can see the end of the upward inertia course, which was set in the period of July.
We can assume that following the price inside the 1.1700/1.1900 side channel is still relevant in the market, where if the price is pinned higher than 1.1825, a path will open in the direction of 1.1860-1.1890. An alternative scenario considers a looped swing in the lower part of the 1.1700/1.1800 channel.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments at minute and hour intervals signal a purchase due to a rebound in the price from the lower border of the flat. The daily indicator, as before, signals a purchase due to the general direction.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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