A Report on Inflation in the US Will Determine Sentiment on Majors

Last week, the US dollar index (#DX) moved away from annual highs and moved to a decline. The trade conflict between the US and China is still in the focus of attention. The US imposed additional taxes $ 37 billion worth on Chinese goods. Donald Trump informed that he could impose additional tariffs for $ 500 billion in case China would take retaliatory actions.

Additional pressure on the US currency was caused by an ambiguous report on the US labor market for June. In the non-farm sector of the country, 213,000 new jobs were created, which was higher than market expectations of 200,000. At the same time, the growth in average hourly wages slowed from 0.3% to 0.2%. The unemployment rate increased from 3.8% to 4.0%.

At the moment, the attention of financial market participants is focused on a report on inflation in the US. The basic index of consumer prices reflects changes in the price of goods and services, except food and energy. This is the key way to measure changes in the purchases trends and inflation in the country. It should be noted that this statistics can influence the further alignment of forces on major currency pairs and the Fed's views on the key interest rate increase.

US Core Inflation Rate
Source: tradingeconomics.com

Experts expect that in June, the core inflation will remain at the same level of 0.2% (on a monthly basis); in annual terms the indicator will increase from 2.2% to 2.3%. We recommend you to pay attention to the difference between the actual and forecasted values.

Let's take a look at the current technical pattern on the EUR/USD currency pair
  • Support levels: 1.16500, 1.15500
  • Resistance levels: 1.17500, 1.18250, 1.19400
EUR/USD Pattern

At the moment EUR/USD quotes are testing the local resistance at 1.17500. The key support is 1.16500. The trading instrument has well worked out the classic reversal figure of Triple bottom. The current technical pattern indicates further correction of the EUR/USD currency pair. We recommend opening positions from the key levels.

If the price fixes above 1.17500, further recovery of EUR/USD is expected. The closest target for fixing profit is the resistance level of 1.18250. In the medium term, the trading instrument may reach 50.0%-61.8% correction zone.

Alternative option. If the price fixes below the key support of 1.16500, it is necessary to consider sales of EUR/USD. The target level of movement is 1.16000-1.15500.

Confirmations and entry points to the market should be looked for on lower timeframes. When following the positions, one should use a trailing stop.

by JustForex, 2018.07.12

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