EURUSD and GBPUSD continue to strengthen over the dollar

EURUSD chart analysis

During the Asian session, the euro continued to strengthen against the dollar. Inflation data showed that in December, price inflation in the US reached 7% as expected. In addition, the address of the chairman of the Federal Reserve, Jerome Powell, before the US Congress, showed the day before yesterday his softer tone of speech (less “hawkish”) than expected. That pushed the (overbought) US dollar into a spiral of weakening. Currently, the pair is $ 1.1460, representing the strengthening of the common European currency by 0.19% since the beginning of trading tonight.

Bullish scenario:

• We need continued positive consolidation and testing of 1.15000 levels.
• Additional resistance at that level is our upper trend line.
• If the dollar’s weakening continues, we can see a further continuation on the bullish side.
• Our next targets are 1.16000 and then the previous high at 1.17000.

Bearish scenario:

• We need a new negative consolidation with 1.15000 levels and the withdrawal of the EURUSD pair to the previous consolidation zone 1.13000-1.14000.
• And below we go down to 1.12000 previous low from last year.

GBPUSD chart analysis

During Asian trade, the British pound strengthened against the dollar. Inflation data showed that in December, price inflation in the US reached 7% as expected. Expectations of an increase in the interest rate of the Bank of England at the meeting in early February are high. This has further pushed this currency pair to new heights. Currently, the GBPUSD pair is at $ 1.3739, representing a strengthening of the British currency by 0.25% since the start of trading tonight.

Bullish scenario:

• We need to continue the current bullish momentum, which would push the GBPUSD pair further above the MA200 daily moving average.
• After that, we can say that we continue further towards the next resistance zone, 1.38500-1.39000.

Bearish scenario:

• We need a new negative consolidation that will pull us below MA200 and direct us towards the lower trend line in the zone around 1.36000.
• After that, the increased pressure could lower the pair below the trend line and return us to the big bearish channel.

Market overview

German news

Wholesale price inflation in Germany declined in December but remained elevated, Destatis data on Wednesday showed.

Wholesale prices rose 16.1 percent year-on-year in December, after 16.6 percent in November, the fastest growth since 1962.

The data showed that wholesale sales prices were on average 9.8 percent higher in 2021 than in 2020. This was the highest annual growth since 1974. Yearly growth was driven by a 32.0 percent rise in oil prices.

The rush of inflation in the eurozone is not as fleeting as previously thought, but, likely, price growth will still be below the European Central Bank’s 2% target in 2023 and 2024, ECB Vice President Luis de Gindos said on Thursday.

American news

A long-awaited report released by the Department of Labor on Wednesday shows that the annual growth rate of consumer prices in the United States again reached its highest level in almost 40 years in December.

The report showed that the annual growth rate of consumer prices accelerated to 7.0 percent in December from 6.8 percent in November, showing the biggest annual jump since June 1982.

Basic consumer prices, which exclude food and energy prices, rose 5.5 percent year-on-year in December, compared with a 4.9 percent jump in November. Annual growth is the largest increase since February 1991.