Global macro overview for 15/02/2018

January inflation undoubtedly exceeded expectations by both the general outlook (0.5% m / m, 0.3% threshold) and core inflation (0.3%, 0.2% threshold). Even the disappointing decline in retail sales (-0.3%, 0.2%) is up for defense if the above-average increases from November and December are taken into account. The economy is doing well, but inflationary pressure is pushing, and the Fed may raise interest rates faster than previously expected. It looks like a very positive signal for the US Dollar, and at the same time a reason for the sale of shares, as in the case of the NFP report at the beginning of February. And yet, at the end of the Thursday's trade (there is no difference from the rest today), the USD was losing everywhere, where it could.

One can debate that since inflation is accelerating in the US, it will also be higher in other parts of the globe, hence, not only the Fed will be more aggressive in monetary tightening. For this reason, after yesterday's data, the USD advantage over other currencies does not have to increase significantly. It was forgotten that the bond market is decisive for market interest rates. It was also forgotten that the level of the 3.0% profitability was to be dangerous for the economy. After the initial decline in indices (small), they quickly returned to the neutral level, and this gave birth to conviction: profitability is invalid, inflation is invalid, the important thing is that the US Dollar loses, commodities gain, and the correction is over. This is why the US Dollar is still losing mostly across the board.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has managed to test the golden trend line again at the level of 1.2508 as it broke through all of the technical resistance on its way up. Currently, the next technical resistance is seen at the level of 1.2539 (swing high), and the next technical support is seen at the level of 1.2434. Please notice the overbought market conditions and a possible bearish divergence forming at the momentum indicator.

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