18.01.201813:26 Forex Analysis & Reviews: The market of currencies can again move to consolidation

As a result of trading on Wednesday, the US dollar received support. The dollar index rose sharply traded against the basket of major currencies, but still remains below the 91.00 mark. Support "American" received a wave of profit-taking by investors after a local rally against him of major currencies, which began after the new year.

The market took a break. Investors decided to "look around" before taking any further action. Published on Wednesday, data on consumer inflation did not bring surprises, which came out in line with expectations. According to the forecasts, in annual terms, the consumer price index (CPI) showed a retention of the previous growth of 1.4%, but the monthly indicator value showed an increase of 0.4% in December against the 0.1% rise in November. The dynamics of the basic consumer price index (CPI) also turned out to be the same with + 0.9% year-on-year. However, the index added 0.5% in December compared to a decrease of 0.1% in November.

The stagnation of consumer inflation in the eurozone, which is celebrated recently, could affect the ECB and not push it in rushing to stop stimulating the economies of the euro area this year. Only time will tell whether this will happen or not, but the lack of progress in rising inflationary pressures will undoubtedly have an impact on the ECB.

The absence of significant events and publications of economic statistics this week may lead to the resumption of the consolidation period if the smooth strengthening of the US dollar stops.

On Wednesday, the market drew attention again to the dollar also due to comments from representatives of the Federal Reserve Kaplan and Evans. Robert Kaplan stating his confidence that "the base scenario should be three stages of increase this year, and if I am mistaken, it may require more increases." On the other end, the statement of Charles Evans is rather unusual, who is described as a "dovish" with regard to the monetary policy of the Fed at the current stage of the time, said that "if inflation jumps, the Fed can accelerate the rate hike."

Comments of the Central Bank members indicate the existing fears of a sharp increase in inflation, which somewhat sober markets. After the publication earlier this year of mixed inflation data in the U.S., markets began to speculate that the Fed may not fully implement its plans for rates this year.

In general, watching the situation on the market, we can say that the signals from the Fed can level out the weakening of the dollar and lead the major currency pairs to the next period of consolidation.

Forecast of the day:

The EUR/USD pair is consolidating at the level of 1.2200. If it keeps below this area, there is a probability of a decline to 1.2130.

The USD/JPY pair is trading above the level of 111.00 but this can be achieved after the growth for the day to this mark. However, if it was maintained above it, this can further rise towards 112.00.