NEW YORK, USA - MARCH 9, 2020: Facade of the New York Stock Exchange on Wall Street, Manhattan. Image source: ©Ioan Florin Cnejevici © 123RF.com
The Consumer Price Index (CPI) in the U.S. rose by 0.4 per cent last month, which met the initial market forecasts. The results released by the Bureau of Labour Statistics (BLS) underpin a minor upsurge in prices compared to January's 0.3 per cent growth.
According to the findings of the economic report, the observed growth in consumer prices is owing mostly to high energy prices; namely, gasoline and crude oil. This is caused by a positive rebound in global demand.
U.S. MoM Inflation Rate Change. Image source: TradingEconomics.com
Headline inflation thus rose to 1.7 per cent, which remains below FED's 2.0 per cent symmetric target level, but it is also the highest level on record since the last peak prior to the coronavirus crash in February 2020.
This noticeable improvement is fostered by lifting economic conditions in the States, spearheaded by growing employment and speeding jobs creation. Meanwhile, recent fears of inflation getting out of hand have stirred commotion on the stock market, as investors now weigh in on the possibility of the Federal Reserve having to adopt a more hawkish monetary policy stance.
U.S Headline Inflation. Image source: TradingEconomics.com
The market did not react quite violently to BLS's report, or at least not as violently as some might have expected beforehand. As can be seen on the hourly chart below, the euro strengthened marginally against the dollar in the first hour following the inflationary data's publication.
The pair continues to be consolidating around the 1.19000 support in a demonstration of resilience on the part of the single currency against the recuperating dollar. Meanwhile, the waning levels of adverse volatility can be inferred from the Bollinger Bands indicator, which are shown to be tightening at present.
Even still, the prevailing market sentiment still seems to be tilted to the downside, which is why EURUSD bulls should not rush to jump on the hopes for an immediate bullish correction.
EURUSD 1H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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