Trump-Putin Negotiations & Hot U.S. Inflation Stir Markets
EUR/USD Potential Double Top Could Resume the Downtrend
Last week the U.S. economy sent some mixed signals, with inflation getting hotter and Retail Sales slowing down considerably. On one hand, rising inflation usually calls for higher interest rates but if the economy is wavering (lower Retail Sales), the Fed should consider cutting the rate.
Most probably the Fed will not make a swift decision based on just last week’s readings but the FOMC Meeting Minutes will be released later this week and will offer more insights regarding the matter.
In other news, President Trump and President Putin agreed to start negotiations for a ceasefire in the Russia – Ukraine war. If this puts an end to the war, gas deliveries will probably resume. Details are still coming out and we may see market movement depending on what transpires.
Economic Calendar Highlights
Today the U.S. is celebrating Presidents’ Day, which means that banks will be closed, and there will be no economic releases.
President Trump will speak Tuesday in a joint interview alongside Elon Musk. The exact time is not known at the time of writing but the interview could spark bursts of volatility, depending on the matters discussed.
The FOMC Meeting Minutes will be released Wednesday at 7:00 pm GMT, offering details regarding the latest FOMC Meeting. The release will have a greater impact if it will reveal clues about the Fed’s next move.
Friday will be filled with PMI (Purchasing Managers’ Index) releases. Europe will be the first to release the Manufacturing and Services PMIs at 9:00 am GMT, followed half an hour later by the U.K. and later at 2:45 pm GMT by the same PMIs for the U.S. economy.
Technical Outlook – EUR/USD
The pair is currently trading right at the 1.0500 resistance, which has already rejected the price once before, last month. At the time of writing, we are dealing with a potential double top, which is a very strong bearish pattern. However, this pattern may be invalidated if the price breaks through 1.0500.
As soon as rejection is seen at the current level, we can call this a “true” double top. If this happens, the chances of a drop to 1.0350 will increase but on the other hand, a break of 1.0500 would be more meaningful (breaking a strong bearish pattern can trigger strong upside movement).
After bouncing several times at 1.0220 support, EUR/USD created a higher low, which is a sign that the downtrend is coming to an end. Supporting this view is the fact that the long-term bearish trend line was clearly broken and re-tested from above.
