High inflation in the United States | 25 Noviembre 2021

25 Noviembre 2021, EUR/USD

High inflation in the United States

EURUSD trading plan:

Market participants' views on the expected path for the federal funds rate over the next few years—implied by a straight read of overnight index swap quotes—rose substantially since the November FOMC meeting, apparently in response to perceived risks of higher inflation. Those risks also contributed to increases in Treasury yields, with 2-, 5-, and 10-year yields rising notably on net. Total PCE price inflation was 4.4 percent over the 12 months ending in October, and core PCE price inflation, which excludes changes in consumer energy prices and many consumers food prices, was 4.1 percent over the same period. In the third quarter of 2021, the staff's common inflation expectations index, which combines information from many indicators of inflation expectations and inflation compensation, was little changed relative to the second quarter and remained at its highest level since 2014. This is a positive signal for the US dollar.

Investment idea: sell 1.1230 and take profit 1.1190.

David Johnson
Analyst of «FreshForex» company
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