Investors are still impressed by the January inflation data from the US. The CPI showed 7.5% y/y – the reading no one has seen in over 40 years. Inflation higher than expected gives the US Fed the ground to raise the rate and reduce its own balance quickly and without any limitations.
On Monday, the Fed is planning to have a meeting and discuss the reserve rate and other aspects. However, the regulator is not expected to discuss the benchmark rate so far.
The thing that intrigues market players the most is the number of rate hikes in 2022. As of now, consensus projections suggest from 4 to 6.
In the H4 chart, having finished another descending wave at 1.1316, EUR/USD is expected to start a new correction towards 1.1370. After that, the instrument may resume falling to reach 1.1280 or even extend this wave down to 1.1255. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is falling below 0 and may continue moving towards new lows.
As we can see in the H1 chart, after rebounding from 1.1417, EUR/USD is forming the second descending structure to break 1.1316 and may later correct towards 1.1370. After that, the instrument may resume falling with the target at 1.1310 or even extend this structure down to 1.1255. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: its signal line is moving above 20 and may continue growling to reach 50. Later, the line may rebound from 50 and resume falling to reach 20.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.