The market has been stagnant for the fourth day in a row, mainly because of the empty macroeconomic calendar. Since there was no significant news, market participants switched to the US inflation report slated for release today.
The data is expected to boost market activity. However, the direction of the market is still the main question. Everything depends on its participants’ reactions. Meanwhile, inflation may climb to 7.1% from 7.0%.
The fact is that in the last two days, there were a lot of rumors that the Fed might raise the benchmark rate by 0.50%. A further increase in inflation could become a strong reason for such a decision.
On the other hand, the US regulator announced its intention to raise the key interest rate long ago. That is why the pace of monetary policy tightening is of secondary importance. At the same time, the ongoing inflation growth that exceeds a rise in salaries is a negative factor for the economy. Thus, after the report's publication, the market may either jump or fall.
Technical Outlook
The EUR/USD pair has been trading within the sideways channel of 1.1400/1.1480 for the fifth day in a row. The pair is showing sluggish activity. Such long stagnation has puzzled market participants.
However, it is just an accumulation process ahead of acceleration. On the four-hour chart, the RSI technical indicator is between lines 50 and 70. This proves that the uptrend is still in force.
Meanwhile, on the four-hour and daily charts, the Alligator indicator points to the uptrend since moving averages are crossing each other. If the market sentiment changes, the crossing of moving averages will provide the first short signal on the four-hour chart.
Notably, on the daily chart, the situation is a bit different. The uptrend is just a correctional movement within the mid-term downtrend. That is why we cannot say that the market sentiment changes to the bullish one.
Currently, the euro/dollar pair is still hovering within the range of 1.1400/1.1480. Such long stagnation may lead to the accumulation process when the price fixes beyond either limit of the range. Thus, traders may apply the breakout strategy, later pointing to an impulsive movement.
Trading signals
- Buy positions could be opened if the price consolidates above 1.1485 on the four-hour chart with the target of 1.1580.
- Sell orders could be initiated after the price fixes below 1.1400 on the four-hour period, with the targeted levels at 1.1350-1.1300.
In terms of the complex indicator analysis, technical indicators signal mixed opportunities on the short-term and intraday periods amid the price stagnation.
