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The US PPI fell to 9.8% versus 11.3%, beating economists' forecasts of 10.9%. In light of strong data, the euro advanced. Thus, we can assume that the US Federal Reserve is likely to raise the interest rate by 50 basis points in September. These assumptions have been confirmed by Mary Daly, the president of the Federal Reserve Bank of San Francisco. At the same time, she notes that it is far too early to "declare victory" in the fight against inflation as there are still high risks of its acceleration. By the way, it contradicts statements about modest rate increases. Anyway, the euro has once again strengthened.
United States Producer Price Index:
After such a steep rise, a correction is needed. Moreover, the euro may drop today amid the projected slowdown in industrial production growth to 0.8% versus 1.6%. Given the current situation in the energy market, any increase in industrial production is now seen as a miracle. Anyway, a decrease in industrial production will be a good reason for a correction.
Eurozone Industrial Production:
EUR/USD retraced to the upper limit of the 1.0150/1.0270 sideways corridor, causing a decrease in the short trading volume. Consequently, a rebound occurred, and bulls pushed the euro to the swing low of the current correction.
The RSI indicator is moving in the 50/70 range on the 4-hour chart, indicating increased bullish sentiment. On the daily chart, the RSI has crossed line 50 from bottom to top for the first time since June, which signals the continuation of the current corrective move.
The Alligator's moving averages are moving up on the 4-hour chart, confirming bullish sentiment. On the daily chart, the indicator's MAs are now crossing, which shows a slowdown in the downtrend.
Outlook
The price is likely to extend the uptrend today. Therefore, consolidation above 1.0350 on the 4-hour chart could cause a correction in the market, and the euro could gradually increase to 1.0500–1.0650.
Should the pair fall below 1.0200 on the 4-hour chart, a downtrend would begin.
As for complex analysis, with the price moving at swing highs, there is a signal to buy the instrument in short-term and intraday time frames. In the medium term, technical instruments make a mixed signal due to the slowing downtrend.
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