The US Consumer Price Index statistics last Friday were not surprising, if a little unusual. The indicator climbed to 6.8% year-on-year in November. On MoM, inflation was 0.8% against the expected reading of 0.7%.
Based on the latest inflation reports, among others, the US Fed may announce its decision to speed up the close of its quantitative easing program by at least fifty percent. In that case, the program could be as early as March 2022 and the Fed could start discussing the rate hike in May.
Investors believe the regulator could hike the rate by 50 basis points next year.
In the H4 chart, EUR / USD is trading lower to 1.1120 and may consolidate there later. If the price breaks the bullish range, the market may initiate a further correction with the target at 1.1363. From a technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 and may later continue to drop to new lows.
As we can see from the H1 chart, EUR / USD forms another descending pattern to break 1.1243 and may later continue lower with the short term target at 1.1166. After that, the instrument may correct back to 1.1243 and then resume its decline towards 1.1100. From a technical point of view, this idea is confirmed by the Stochastic Oscillator: its signal line moves below 20, thus implying a further decline to new lows.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Warning
All forecasts contained in this document are based on the opinion of the author. This analysis cannot be taken as trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.