The slight increase in the single European currency, which can be called symbolic is associated exclusively with the GDP of the euro area for the fourth quarter. First, the data for the third quarter was slightly improved, and the rate of economic decline was revised from -4.3% to -4.2%. Second, while it was previously thought that the economic downturn accelerated to -5.0% in the fourth quarter, the latest estimate suggests an acceleration to -4.9% only. Frankly, everything has remained almost unchanged. The decline in the European economy is still quite deep and still accelerating. So there is nothing positive in yesterday's data. The single European currency could not grow. Although the reaction is quite difficult to call it growth.
GDP Growth Rate (Europe):
Most likely, such a slight increase is largely a banal preparation for the inflation data published today in the United States, after which the single European currency will go down with a new force. Moreover, the forecasts were revised for the better yesterday. At the beginning of the week, inflation in the United States was expected to accelerate from 1.4% to 1.5%. Now it is expected to grow to 1.6%. The most optimistic forecasts assure us that the growth rate of consumer prices will accelerate to 1.7%. In any case, the increase in inflation is a positive factor. Moreover, inflation is approaching the target level of the Federal Reserve System. This means that the US regulator has another reason to think about tightening monetary policy. Especially since Jerome Powell recently hinted at it. However, not in the context of inflation, but the continuous growth of stock indices, which causes considerable concern to the regulator. According to the head of the Federal Reserve System, the regulator is concerned about growing imbalances and further inflating the stock bubble. There is only one way to combat this, it's by tightening the parameters of monetary policy. The increase in inflation in this case becomes only one more reason in favor of such a decision. So, if the forecasts for inflation are confirmed, then by the end of this year we may see, even if not an increase in the Federal Reserve's refinancing rate, but at least a reduction in the quantitative easing program or its complete collapse. And all this will inevitably lead to an increase in the dollar as its supply will be greatly reduced.
Inflation (United States):
The EUR/USD currency pair found a variable support point in the area of 1.1830 after a rapid downward movement, where there was a slowdown and as a result a pullback of 75 points. The downward interest still exists in the market, which means that the pullback could be a platform for regrouping trading forces.
The market dynamics have an average level, which has a positive effect on the clock component of the market.
If we proceed from the current location of the quote, then we have a gradual increase in the volume of short positions relative to the recent pullback.
Considering the trading chart in general terms, the daily period, it is worth highlighting the full-size correction move from the maximum of the medium-term trend, 1.2349 --> 1.1835.
We can assume that the downward interest will continue in the market, which will lead to an update of the local minimum of the existing correction of 1.1835, and then to a decline in the price in the direction of 1.1750.
From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments in the minute, hour and day periods signal a sale due to an intense downward movement in the market, according to the correction structure.
