The market basically paid no attention to the data on inflation in the euro area. But specifically, this is not surprising. Yes, inflation rose from 1.9% to 2.2%. But investors have been aware of this since the publication of the preliminary assessment. Ergo, the final data did not bring anything new.

Inflation (Europe):

But the publication of the text of the minutes of the meeting of the Federal Open Market Committee (FOMC) caused a rapid revival, and set the market in motion. At first, the dollar even became somewhat cheaper, but immediately returned almost to the previous values, and after a while, during the Asian session, its steady strengthening began. The reason for such tossing from side to side lies solely in the fate of the quantitative easing program. The initial weakening of the dollar is caused by the fact that there are no direct and specific decisions on this issue in the text of the protocol. However, this is a deceptive impression, since in fact, the American regulator, as before, intends to submit for consideration the issue of curtailing the program in the near future. The issue will be submitted for consideration in September. And apparently, the majority of the members of the board of the Federal Reserve System may vote for its gradual winding down. And this is nothing but a tightening of monetary policy, which is the reason for the growth of the dollar.

Today, the dollar may receive support in the form of data on the labor market, the situation on which continues to improve. In particular, the number of initial applications for unemployment benefits should be reduced by 15 thousand, and repeated applications by as much as 116 thousand. Here, it is necessary to recall the recent words of Neel Kashkari that before thinking about curtailing the quantitative easing program, it would be worth getting stronger data on the labor market than the latest report of the United States Department of Labor showed. So, judging by the figures, the number of applications for unemployment benefits, especially repeated ones, is already close to normal values. In the pre-crisis times, the number of repeated applications was slightly less than now. Therefore, nothing prevents the Federal Reserve System from starting to wind down the quantitative easing program.

Number of repeated applications for unemployment benefits (United States):

The EUR/USD currency pair managed not just to restore the downward course relative to the recent correction, market participants also managed to update the local minimum of 2021. Meanwhile, the level of 1.1700 has lost the status as a pivot point in the market.

The technical indicator RSI is located near the oversold level. In this case, the indicator of the technical instrument is ignored, due to the high demand for short positions.

Looking at the trading chart on the scale of the daily period, we can see a strong downward cycle since the beginning of June, the scale of which is 550 points.

Expectations and prospects:

Taking into account the intense downward movement, the subsequent weakening of the euro in the direction of 1.1610 is not excluded. The main growth in the volume of short positions will occur when the price is kept below 1.1600, on the daily period.

The complex indicator analysis has a sell signal based on the short-term, intraday, and medium-term periods.