Although the US inflation dropped, the euro did not receive support. Economists had expected that the consumer price growth would slacken to 8.2% from 8.5%. This might have forced the Fed to choose a slower key interest rate hike pace.
The expectations of a considerable rise in the benchmark rate are the main driver of the US dollar. That is why slower inflation might have cooled down these expectations, thus causing the greenback’s depreciation. However, inflation slowed down just to 8.3%. It is still unknown whether the Federal Reserve will revise its approach or not. Thus, the US dollar continues gaining in value.
Against the backdrop, the EUR/USD pair failed to leave a wide channel between 1.05 and 1.06. The currency just approached its lower limit. It is likely to go hovering within the range. Today, it may start moving towards its upper limit amid the US unemployment claims report that may unveil an insignificant rise.
The number of first-time claims may increase by 5k, whereas the number of continuing claims may advance by 6k.
Meanwhile, data on the US producer prices will hardly affect the market situation. The growth pace may slacken to 11.0% from 11.2%. The fact is that the report is likely to reflect the US inflation data that has been already priced in by market participants.
Although we see a local surge in trading activity, the euro/dollar pair continues trading within the channel of 1.0500/1.0600. Such a long price hovering within the range is attracting speculators. This process may spur a surge in activity, thus allowing the pair to break either range limit.
The RSI technical indicator moves along the mid-50 line on the four-hour chart, thus proving stagnation. On the daily chart, the indicator is hovering in the lower area, thus pointing to a downward movement in the structure of the main trend.
On the four-hour chart, the Alligator’s moving averages have numerous intersections, thus reflecting a flat movement of the pair. On the daily chart, the indicator is pointing to a mid-term downtrend as moving averages are heading downwards.
In the same period, the downtrend is slackening, thus spurring a change in the market sentiment.
Outlook
Under the current conditions, traders may still apply a breakout strategy. Thus, buy positions could be opened if the price consolidates above 1.0636 on the four-hour chart. Meanwhile, traders may consider opening sell orders if the price settles below 1.0470 in the same period.
In terms of the complex indicator analysis, technical indicators signal mixed opportunities in the short-term and intraday periods. In the mid-term period, the indicator provides sell signals due to the downtrend.