EUR/USD. August 13th. Results of the day. US inflation is accelerating again

Source: Forex Analysis

4-hour timeframe


Amplitude of the last 5 days (high-low): 82p – 63p – 59p – 44p – 69p.

Average amplitude over the last 5 days: 63p (72p).

The second trading day of the week ended just like the first – in a rather narrow side channel. The only important macroeconomic report on August 13 – the US Consumer Price Index for July – supported the US currency, but not enough for the pair to get out of an open flat. THe euro/dollar pair just fell to the lower Bollinger band, which signal a flat. Thus, nothing has changed, despite the fact that inflation accelerated to 1.8% y/y in July. This is a fairly good indicator, given the proximity of the Fed’s target level of 2.0%. The better the performance is, the less likely it is for the Fed to lower its key rate again. Although, most likely, a new easing of monetary policy will happen anyway, Donald Trump, who does not find a common language with China, does his best to do this, but he does not get tired of criticizing Jerome Powell and the Fed. However, Powell himself has repeatedly stated that the regulator will respond to specific figures, and not to Trump’s statements or passions in the US-China trade conflict. Thus, there is still hope that there won’t be a new rate cut at the next Fed meeting. At the same time, hopes for a new growth of the US dollar. Meanwhile, most traders remain “on the fence” and can only wait for the arrival of new macroeconomic reports that will trigger the reaction of the foreign exchange market. Well, or the speeches of Donald Trump.

Trading recommendations:

EUR/USD continues to adjust inside the side channel. Thus, we recommend buying the euro/dollar pair only after the Bollinger Bands indicator turns up with targets of 1.1253 and 1.1266. Buying the US dollar is recommended in small lots with the aim of Senkou Span B, if the Bollinger bands turn down.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A – light brown dotted line.

Senkou Span B – light purple dashed line.

Chikou Span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

The material has been provided by InstaForex Company –