13.04.2021: How US inflation data may affect EUR/USD and GBP/USD?

The euro and the pound sterling are trading sideways, reflecting traders’ cautious behaviour ahead of the US inflation report. The UK industrial production data turned out to be really surprising. Firstly, the previous reading was upwardly revised from -4.9% to -4.3%. Secondly, a drop in the indicator slowed down to -3.5%, whereas economists had expected a decline of 4.8%. Although the report is positive and the UK industrial sector is showing better performance, the pound sterling displayed almost zero reaction. The British currency inched up by slightly more than 20 pips. It is highly possible that traders remain cautious ahead of the publication of the US inflation data. Thus, the euro began losing in value at the beginning of the Asian session. The current market dynamic is not in line with analysts’ expectations. It is a typical situation ahead of an important event. In the US, inflation may accelerate to 2.6%, showing a significant jump. It means that a risk of the inflationary spiral is becoming higher. Notably, some experts suppose that the process has already begun. At the same time, the US Fed is not taking any measures to curb the inflation rise. It seems that the regulator simply ignores the problem. That is why markets will be surprised by any Fed’s action. Moreover, to cap the inflation rise , the Fed will have to tighten its monetary policy. The fact is that neither markets nor the US economy are ready for such changes. It is highly likely that after the reveal of the US inflation report, the US dollar will slump. Yesterday, the euro/dollar pair showed local activity and advanced from the support level of 1.1870. Judging by the history, this level acted as support several times. As a rule, the price bounces after reaching 1.1870. Analyzing the current chart, we can see that from April 7 to April 12, the euro/dollar pair formed a sideways channel between 1.1860 and 1.1920. It is still hovering within the mentioned levels. It is quite possible that the pair will trade sideways for some time. That is why traders may enter the market using the strategy based on a rebound from either limit (1.1860/1.1920) or a break of any of the limits (1.1860/1.1920). At the same time, the pound sterling acted according to the previous scenario. Once the pair reached the level of 1.3669, the volume of short positions dropped and traders started opening long positions. On the trading chart, we can see that traders are still focused on a rebound from 1.3669. However, the price is already 100 pips above this level. That is why traders may open buy positions, if the price consolidates above 1.3785 with the target of 1.3850. According to the main forecast, the pound/dollar pair will continue the correctional downward movement. In this case, the pair should fix below 1.3650 on the four-hour chart. https://www.instaforex.com FX Analytics - https://www.instaforex.com/forex_anal... Forex Calendar - https://www.instaforex.com/forex_cale... Forex TV from InstaForex - https://www.instaforex.com/instaforex_tv Forex charts - https://www.instaforex.com/charts Instant account opening - https://www.instaforex.com/fast_open_... Forex Trading Contests - https://www.instaforex.com/forex_cont... List of official InstaForex blogs:   / instaforex     / instaforex     / instaforex   #forex_news #european_session #instaforex_tv