Ahead of the release of the US inflation data, stock indexes suddenly showed solid gains, with the S&P 500 gaining more than 1%. Oil and gold also increased in price. However, yields on US government bonds remained almost unchanged, which holds us back from making premature conclusions. Media reports suddenly started expressing opinions about inflation decreasing as if it were an almost accomplished fact, despite Federal Reserve Chief Jerome Powell’s hawkish tone during his speeches before Congress. We do not rule out that a surprise is being prepared for imprudent investors.
Currently, the euro is above the balance indicator line. In addition, the Marlin oscillator, being in the positive area, has turned upward. The price remains below the recent high from July 8th, so even now, the euro remains in a sideways trend. As before, we expect worse data from the US CPI (above the forecasted 3.1% y/y for the overall index) and counter-dollar currencies to show weakness.
On the 4-hour chart, the price is rising above the indicator lines, but the Marlin oscillator is growing much slower than the price, trying to stay in the downward trend territory. A sign of a price reversal will be its consolidation below the MACD line (1.0803). Next, the euro will struggle with the support at 1.0788. An alternative scenario suggests a price increase to the target level of 1.0905.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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