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The risk of a wage price spiral is real

The risk of a wage price spiral is real | 10 May 2022

10 May 2022, EUR/USD

The risk of a wage price spiral is real

EURUSD trading plan:

Germany's finance minister warned that rising wages could further fan inflation, adding that parties involved in collective bargaining had a responsibility to help prevent that from happening and that one-off payments might be needed. German inflation hit an annual 7.8% in April, the highest in more than four decades, which is expected to fuel wage demands. Lindner, who is also leader of the business-friendly FDP party, said that the companies and unions negotiating wage agreements had a great responsibility in preventing the wage price spiral, adding that they had in the past always lived up to it. This is a negative signal for the European currency.

Investment idea: sell 1.0585 and take profit 1.0527.

David Johnson
Analyst of «FreshForex» company
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