May 13 2021 0
Increasing inflationary pressure seems to be boosting the prospect of soon tightening monetary policy by the Fed, causing the USD to rebound strongly. This causes significant changes on the currency pairs.
- US inflation in April was a big surprise when it increased 3 times compared to the general expectation.
- USD bounced strongly after this data.
- FED President St. Louis - James Bullard on Tuesday said he expects inflation to likely stay as high as 2.5% next year, while another Fed official, Lael Brainard, said last week's weak labor data suggested a recovery America's economic recovery still has a long way to go.
- The European Commission (EC) upgraded eurozone growth this year to 4.3 per cent from 3.8 per cent, and the bloc's economic output is expected to reach pre-pandemic size by the end of the year, earlier than with previous estimates.
- GBP has recovered in recent days, supported by the removal of political risks as the country begins to reopen its economy broadly.
Price has approached the target area around 109.5. You consider taking profits on the previous day's buy orders, only consider buying again when the 109.5 resistance area is clearly broken, then the target will be the top of this year.
The EURUSD rate also had a "knee-jerk" reaction in the last session. Pending buy orders around our 1.21 zone have also been activated, you can hold orders, following the current bullish structure. However, the selling pressure is showing very clearly after the rounding top pattern is completed, we need to pay attention to the 1.21 zone, if this zone is broken, temporarily stop buying.
The rounding top pattern has formed around the upper boundary of the ascending channel and it is starting a downward correction, we will watch to buy when the price retests the 1.40 zone with a bullish signal. In case this support fails, the next buy waiting point will be around the lower border of the channel.
The price broke through the 1.210 zone, but as warned of a possible unexpected rebound when the market was in oversold conditions, the bulls returned strongly and pushed the price above the 1.215 zone, this action. created a very noticeable bullish pin bar candle on the daily chart, expecting the price to correct up after this signal, reversal traders can consider entering orders, note the need to place a full SL.
The avoidance of buying around the support zone of 0.78 is correct, the price has dropped very strongly in the last session, approaching the lower border of the rising price channel. We still hope that the price will return to the uptrend from this lower boundary, but the bullish signal has not appeared yet, you should not rush to enter the order. For active buy orders around 0.775 zone, you may consider exiting early, waiting for buying opportunities around 0.77 zone.