Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

Have Markets Overreacted to Last Week’s Inflation Data?

Published 11/14/2022, 03:51 AM

Risk appetite improved worldwide after signs of cooling in US inflation and the prospects of a dovish tilt by the Federal Reserve. The US dollar weakened against other counterparts. However, markets may have exaggerated last week’s inflation print since a few declines in inflation do not indicate that inflation pressure is finally over and that the Fed is shifting from hawkish to dovish.

The market’s risk appetite could thus be premature with limited upside in both EUR/USD and GBP/USD. The UK inflation data release will be key for the British pound on Wednesday.

GBP/USD - Technical View

The shift in global risk sentiment and the significant dollar sell-off benefitted the pound and sent sterling soaring, lifting it above 1.16 and further to the 1.17-1.19 resistance zone. Sterling bulls should, however, be careful. UK employment and inflation data are on tab this week, leaving the pound vulnerable.

From a technical perspective, the pair is overbought, with the current resistance zone ranging from 1.17 to 1.19. We expect further gains to be limited to a maximum of $ 1.1940. The most likely scenario, in our opinion, is a correction toward 1.15/1.1450.GBP/USD daily chart.

EUR/USD - Technical View

Speculation for a smaller Fed rate hike in December could keep the pair afloat over the coming weeks. However, the pair is overbought, making it vulnerable to a correction toward the parity level. A bullish breakout above 1.0370 on the other side could see a bullish extension towards 1.06.   

EUR/USD daily chart.

Our trading ideas for today:

EUR/USD

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .
  • Long at 1.0330
  • Short at 1.0290

GBP/USD

  • Long at 1.1775
  • Short at 1.1740

DAX (GER40)

  • Long at 14320
  • Short at 14260

Settings for all trades: Entries from 8:00 am UTC,  SL 25, TP 40

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumptions of MaiMarFX traders. They are not meant to be solicitations or recommendations to buy or sell a specific financial instrument.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.