EUR/USD: PCE surprises higher, go short!

27 lut 2023

Euro/US Dollar.

Today the overall trend for the US Dollar Index is bullish, corresponding to the Euro-American currency, it is recommended to short at high levels. Based on the market conditions, the following suggestions are given:

Short at the 1.0560-1.0570 range, with a stop loss of 20 points, and targets of 1.0540, 1.0520, and 1.0500.

Here is the analysis:

Last Friday, the US released the January PCE price index data, in which the year-on-year PCE price index in January was higher than the previous value and the estimated value, and the core PCE price index was also higher than the previous value and the estimated value.

This indicates that domestic inflation in the United States rebounded significantly in January, causing the PCE index to rise. Not only the ordinary annual rate and monthly rate increased, but also the core annual rate and monthly rate increased. This phenomenon is very abnormal. Although the Fed has been continuously raising interest rates and interest rates have been rising, this tightening policy will undoubtedly damage the economy. However, in order to control inflation, the Fed can't do much, so they can only raise interest rates quickly.

Affected by this, the US Dollar Index has been continuously rising recently, and the trend in the near future has basically been determined to be in the direction of an uptrend. In terms of operation, the short-term trend is mainly bullish on the US dollar, so we should buy the US Dollar Index at low levels and short non-US currencies at high levels. This is the main operating strategy for today, for reference!

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