The US dollar index is consolidating near 101.30. Data released yesterday showed that inflation in the US, measured by the consumer price index (CPI), fell to 4.9% in April from 5% in March. This figure was slightly below the market forecast of 5%. At the same time, core inflation also showed a downward trend and decreased from 5.6% to 5.5%. This inflation data may become another argument for the Fed to complete the current cycle of monetary policy tightening. Otherwise, the US economy will continue to face the consequences of an economic slowdown that could lead to a recession. Another negative factor for the dollar remains the issue of the US debt ceiling, which cannot be raised due to political disagreements in Congress.
SELL STOP 101.20/TP 100.50/SL 101.40
GBP/USD
The GBP/USD pair is holding near the local highs at 1.26. Investors are looking forward to today’s meeting of the Bank of England. According to forecasts, due to high inflation (in March, the consumer price index was 10.1%), the regulator will be forced to go for another increase in interest rates by 25 basis points to 4.5%, despite the fact that officials earlier announced a pause in the tightening cycle. This increase could be the twelfth in a row. In addition, the department should update its economic forecasts. Analysts at Barclays expect more optimistic growth prospects, which could provide additional support for the British currency. Given the above, long positions on the GBP/USD pair remain a priority.
BUY LIMIT 1.2600/TP 1.2750/SL 1.2550
EUR/USD
The EUR/USD pair is trading near 1.10. Yesterday, data on the consumer price index in Germany were published, with the index falling to 7.2%. Inflationary pressures in the German and European economies are easing, but price growth is still strong, allowing the European Central Bank (ECB) to maintain hawkish rhetoric. The day before, this possibility was confirmed by board member Isabelle Schnabel, who said that the regulator will tighten monetary policy until core inflation begins to decline to the target level of 2%. The official added that interest rates are likely to remain high for a long time, and their decline is unlikely yet. Against this backdrop, the euro’s growth may continue.
BUY STOP 1.1000/TP 1.1100/SL 1.0970