Investing.com – All eyes and turned on the most important trading day of the week.
Inflation in the USA, which has been below the 2% target for a long time, reached 4.2% in April, the highest of the last 13 years. The expectation for May is that this rate will increase to 4.7%, and this increase has also increased the expectations that the intra-year rise in inflation will continue and the Fed may switch to verbal guidance accordingly.
It dropped to 1.47 yesterday, the lowest level of the last month, and fell below 90.0. Dollar depreciated in global markets before inflation data and dollar sales are expected to continue in case of a rate that does not exceed expectations. The riskiest possibility for the markets is inflation exceeding 4.7%, in which case the Fed is expected to open the discussion of reducing asset purchases.
On the ECB side, interest rates are not expected to change at this month’s meeting, but there may be a reduction in asset purchases. In the previous meeting, it was stated that steps would be taken depending on the indicators, and since the recovery in the regional data continues in the post-meeting period, it is possible to decrease the asset purchases at today’s meeting.
The ECB interest rate decision will be announced at 14.45 CEST, followed by a live press conference, and the CPI in the USA will be announced at 15.30. On the one hand, on the other hand, volatility in parities may increase, especially with the simultaneous announcement of inflation figures. Traded near the 1.2160 level, the 1.2250 resistance on the pair is seen as an intraday support at 1.21.
Author: Necdet Erginsoy
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