09.01.201810:10 Forex Analysis & Reviews: The target level of inflation in the US can be revised?

Yesterday's data on the US economy in the second half of the day helped the US dollar strengthen its position against the euro and the pound.

According to the report, employment indicators in the US in December 2017 increased. The index of employment trends of the Conference Board rose to 107.10 points against 106.36 points in November. Compared to December 2016, the index rose by 5.2%.

The consumer lending in the US in November also increased.

According to the report of the Federal Reserve System of the USA, consumer lending grew by $ 27.95 billion, and loans that did not take into account mortgage debts increased by 8.83% compared to the same period of the previous year. Economists had expected growth in consumer lending in November at $ 18 billion.

The speeches of a number of representatives of the Federal Reserve also positively affected the US dollar.

For example, the president of the Federal Reserve Bank of Atlanta, Raphael Bostic, said that it is advisable to continue a gradual tightening of monetary policy, but this does not mean that the rates will be raised 3 or even 4 times a year.

Bostic also noted the risk that low inflation expectations could force the Fed to be more patient in terms of raising rates, and fixing inflationary expectations in the long term below 2.0% could seriously affect future committee decisions.

Another representative of the Fed, Rosengren, suggested that the Fed should explore ways to provide greater flexibility to achieve price stability, including changing the target inflation rate.

This does not mean that the inflation target will be revised, but clearly points to one of the options, as inflation remains below the target levels of central banks, despite all the aggressive measures to ensure its growth.

According to Rosengren, the inflation rate of about 2%, which is the target for many leading central banks, was elected before the Fed's leadership realized that interest rates will remain low for a longer time, which leads to the need for its revision.

As for the technical picture of EUR/USD, the pressure may continue to exist against the backdrop of talk of possible intervention. Today's data on unemployment in the euro area will be of great importance. It is expected to decrease. If this does not happen, the pressure on the euro may increase, which, paired with the US dollar, will lead to a breakthrough in the intermediate support level 1.1950 and a further decline in the trading instrument to 1.1910 and 1.1860, where large buyers of risk assets can return to the market.

In the case of good data on the euro area, a breakthrough of 1.1980 could lead to an increase in long positions and a return of the trading instrument, after a downward correction, to a 1.2000 area.