US inflation data will be released tomorrow, which investors have high hopes for. After all, if inflation really starts to rise, then the Federal Reserve will not look for new ways to stimulate the economy. And the situation is such that the regulator has almost no other options but to expand the quantitative easing program. If it is necessary to further stimulate the economy. However, new data indicated that investors have something to fear, and the risks of a full-fledged slide into deflation has increased for the United States.
But before we talk about prices in the United States, it is worth taking note of the situation with the European industry. Especially since it is clearly on the mend. For example,the rate of decline in industrial production slowed from -43.4% to -20.3% in Italy. It fell from -35.0% to -23.4% in France. And we are talking about the second and third economies of the eurozone. So the situation is clearly gradually improving. However, the scale of the decline is still quite impressive. Let's just say that at the moment the scale of the decline in industrial production in Italy is comparable to the crisis of 2008-2009. It is even more so in France.
Industrial production (France):
However, all this did not impress market participants, in contrast to producer prices in the United States, the rate of decline of which remained unchanged. But the forecast was for a slowdown from -0.8% to -0.3%. Some even predicted a slowdown in the rate of decline in producer prices to -0.2%. So it is not surprising that the dollar immediately began to fall in price the moment these data were released. In any case, this indicates that not only will inflation not rise, but it could even decrease. Although it is almost zero. And deflation will force the Fed to immediately turn on the printing press.
Producer prices (United States):
From the point of view of technical analysis, we see another round of ascending positions, which appeared within the average level of 1.1250, eventually returning the quote above the level of 1.1320. The recovery process is postponed for a later period of time, and speculative activity is kept by the quote in the upper part of the horizontal course.
Considering the trading schedule in general terms (daily period), you can see that for the third week, the sideways movement of the price with variable frames is fixed at 1,1180//1,1250//1,1350, and since the beginning of July, the quote has completely closed the amplitude in the upper part of the range of 1.1250/1.1350.
We can assume that if the upward move set last Friday is kept, the quote will once again head towards the 1.1350 mark, where it will systematically slow down the movement and as a fact form a stagnation/pullback model.
Based on the above assumption, we can consider long positions higher than 1.1330, in the direction of 1.1350.
From the point of view of a complex indicator analysis, we see that the indicators of technical instruments on hourly and daily periods signal a purchase due to the price being concentrated in the upper part of the variable range.
