EUR/USD at 12-week highs – where next?
Economic data today at 1pmUK could be a further generator of movement with German CPI. Consumer price inflation is forecast to decelerate to 3.5% in November YoY, from 3.8% the previous month.
To find a lower inflation rate, we have to go back to June 2021. Even though the ECB will have to look at inflation of all countries in the eurozone, Germany CPI data could still move the euro. Lower inflation wouldn't be necessarily bad news for the European currency. The euro has been rising against the dollar for the past two months and is on a rising trend against the pound since the very end of August. Lower inflation could mean that measures taken by the EBC are working. A higher-than-expected German inflation could also support the euro, even though it is not so good news for the European central bank. Meanwhile, in the US currency traders await the second reading of GDP in the third quarter. Economists anticipate an annualised expansion of 5% , the most since he last quarter of 2021. The first reading showed at 4.9% rise. Also due are wholesale inventories and the Fed Beige Book.
(AI Video Transcript)
Today, we will keep a close eye on the EUR and the USD. The euro has been doing well against the dollar recently and it's expected to stay strong. Germany will release its consumer price inflation data, which is expected to show a slight decrease. This could have a big impact on the euro's performance. Inflation is important because it measures the rising prices of goods and services. If the inflation rate is lower than expected, it could mean that the European Central Bank's efforts to control inflation are working better than anticipated. This could provide support for the euro, which means it could continue to do well against other currencies.
For traders, this is an interesting time to be in the market. You might want to consider setting your stop-loss at around 109 level and aim for a price target of 110.65 or even higher at 112.70. Setting a stop-loss is important because it helps limit your losses if the market goes against you. On the other side of things, lower inflation is not necessarily a bad thing for the euro. In fact, the euro has been gaining value against GBP/USD for the past two months. It's currently trading at 86.49 against the pound. So, lower inflation could actually be a positive sign for the euro.
Over in the US, economists are predicting a 5% increase in the gross domestic product (GDP) for the third quarter. This is higher than the initial reading of 4.9%. This is a good sign for the US economy and could potentially impact the US dollar's performance. There's some other important data to keep an eye out for as well, like the release of the Fed beige book. This will give us more insight into the overall economic conditions in the US. So, it's clear that both sides of the Atlantic will be closely watching the euro-dollar trade as these economic indicators and inflation figures are released.
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