The first significant event of this week will be the publication of preliminary data on inflation in Europe. But they are published only tomorrow, while today there are preliminary data on inflation in Germany and Italy. And since we are talking about the first and third economies of the euro area, they are naturally of great importance for pan-European inflation. In Italy, inflation is expected to accelerate from 1.1% to 1.5%, while in Germany it should rise from 2.0% to 2.3%. So in Europe, we are still talking about accelerating inflation, which makes the probability of tightening the monetary policy of the European Central Bank more and more high. However, if we recall the recent data on producer prices in Italy, there is a possibility that at least in the third economy of the euro area, inflation may grow slightly stronger. In other words, there are still risks of a stronger increase in inflation, which practically removes all questions about the further actions of the European regulator. Especially if inflation eventually rises above 2.0%. According to forecasts, tomorrow it should accelerate to this value. In general, the market today may begin to grow fears that the European Central Bank will soon raise the refinancing rate, although the European economy is clearly not ready for such a step yet. And here it is necessary to note the fact that the overall strengthening of the single European currency over the past two months was largely due to the reduction of such concerns, as the rate of inflation growth clearly slowed down, and the appearance of stabilization of the situation was created. This allowed investors to assume that the European Central Bank would leave things as they were. Thus, if inflation in Germany and Italy grows slightly stronger than expected, the single European currency will almost immediately begin to lose its position, just on the growth of concerns about an increase in the refinancing rate of the European Central Bank.
Inflation (Germany):
The EURUSD pair showed quite high activity last Friday, which led to the formation of a V-shaped pattern. It should be noted that the formation is considered complete, and the quote completed the trading day in the region of 1.2200 - the high of the pattern.
Market dynamics, as before, have signs of acceleration, which is confirmed by the structure of trading candles, as well as a high coefficient of speculative transactions. If we proceed from the quote's current location, then we can see a local stagnation with a range of 1.2180/1.2205.
In this situation, it can be assumed that the existing stagnation may well become a catalyst for trade forces, which will interest speculators. In this case, the work will proceed from the points of price holding outside the boundaries of this or that stagnation boundary 1.2180/1.2205. In simple words, we identify the outgoing impulse relative to deceleration.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments on the hourly and daily timeframes signal a buy, while the minute intervals have a variable signal due to stagnation.
