- USD – CPI above the FED target increases the probability of a rate hike
- EUR – Growth level of the Eurozone suggests that tapering could start soon
Main currencies daily performance.
USD – CPI above the FED target increases the probability of a rate hike.
In the session on Wednesday, the Consumer Price Index (CPI) and the Core Consumer Price Index (Core CPI) were published, discounting energy and food components. The CPI (YoY) index as of January climbed to 2.1%, above the 1.9% expected by analysts. The current level shows a consolidation in the strength of the level of consumption in the US economy; in this context, the probability of raising the interest rate in the next meeting of the Federal Open Market Committee (FOMC) increases.
Technically, we observe the continuation of the corrective movement that could reach the area from 88.66 to 88.44, the area from which it could form a higher grade connector (or mother wave), and begin to bounce. At the moment we maintain the neutral position in this index.
US Dollar Index 1-hour chart ( click image to enlarge)
EUR – Growth level of the Eurozone suggests that tapering could start soon.
The last Gross Domestic Product (GDP) (YoY) of the Eurozone published by Eurostat, has reached 2.7% for the second consecutive month, giving signs of stabilisation in the level of economic strength. In the same way, this confidence in the robustness of the economy of the Eurozone gives us indications that the tapering of the policy of quantitative easing could begin to begin very soon.
The single currency is developing a bullish structure that could bring the price to 1.2488, from where it could make a corrective move to 1.24190. While the EURUSD pair does not lose the 1.2275, the primary trend is bullish.
EUR-USD 1-hour chart (Click image to enlarge)