The dollar continues to hold an advantage over European currencies today. The eurozone offers no data today, so the focus remains where it was last week — on the US agenda and the Federal Reserve meeting that starts tomorrow.
US August inflation gave the central bank no reason to pause. Prices rose 0.4 percent month-on-month after 0.1 percent in July, while the year-on-year reading stayed at 3.4 percent. The reason it did not rise is purely technical: the comparison is with August of last year, when prices were already rising, and the high last-year base ate part of the current acceleration. I would not treat that as a sign that inflation has calmed.
The report then splits into two camps. The core measure, which excludes fuel and food, slowed year-on-year from 2.5 to 2.4 percent, and this is the only argument the dovish faction inside the Fed can advance. Their opponents will point to something else. The monthly core rate accelerated from 0.2 to 0.3 percent, which on an annualized basis is about 3.7 percent — nearly twice the central bank's target.
Gasoline was the main driver this month, rising 3.9 percent. That single item accounted for more than a third of the entire index's gain, while energy as a whole added 2.1 percent for the month and 16.3 percent year-on-year.
But the key problem with the report is not the numbers themselves but that it describes an already outdated reality. It was compiled when oil was around $90/barrel, whereas the market has moved above $108 and physical deliveries trade even higher. In other words, the main hit to prices did not make it into the data and will show up in subsequent releases. I'll explain why this matters for a beginner. Data always look backward — they record the past month — while the market lives in the future. When participants see that reality has already moved ahead of the report, they trade the number that will appear next time, not the published print.
That is why the market is already pricing a rate hike, and the dollar benefits. The pound is a telling example. A strong UK GDP print on Friday — the economy grew in July instead of stagnating as expected — pushed sterling higher. But that move lasted only until the US release. Good domestic data cannot save a currency when a powerful stream of news is coming from the other side of the pair.
There are no significant events today. Speeches by Isabel Schnabel and Christine Lagarde will not change the picture, especially on the eve of the Fed meeting, when the market is listening for signals from a completely different source. The backdrop for the euro is unfavorable: the single currency has no domestic catalysts and a stronger dollar presses the pair. Buyers are unlikely to risk much before tomorrow's meeting starts, so I expect muted dynamics with a downward bias.
For the euro, the upside level is 1.1588. A breakout above it takes the pair toward 1.1613 and then 1.1631. Frankly, I have little faith in that scenario because it needs a catalyst, and the calendar is empty today. On the downside, the reference is 1.1568; its break opens the road to 1.1550 and 1.1534. That is the direction I consider primary. The market continues to buy the dollar in anticipation of Wednesday, and without outside help, the euro has nothing to resist with.
For the pound, the upside is 1.3531, with targets of 1.3565 and 1.3596; the downside is 1.3498, with movement toward 1.3474 and 1.3457. Sterling is now fully dependent on the dollar, and Friday made that clear. There is no domestic agenda today either, so pound decisions will follow once the overall direction of the US currency is determined.
For the euro, the upper boundary is 1.1585. Here I expect the pair to try to push higher, fail to find continuation buyers, and then return down. It is the return below the level that gives the sell signal, not the mere breakout above. This scenario is convenient today because it matches the direction the market is already inclined to move. Note that this reference sits just below the breakout point 1.1588, so the two models do not conflict but follow sequentially. While the euro has not reclaimed 1.1588, the return model works.
The lower boundary for the euro is 1.1552. The logic is reversed: I look for long positions after an unsuccessful attempt to push the market down. But apply this scheme today with caution — buying against the prevailing market mood is harder than selling with the trend. The level lies between the breakout scenario targets 1.1550 and 1.1534, so the pair will reach it only if the decline develops. In that case, a bounce is more likely to be a short technical move than a reversal; I keep the target modest at 15–20 pips.
For the pound, the upper reference is 1.3527. The scheme is the same as for the euro: the pair pokes higher, fails to hold, and collapses back, after which I consider short positions. The level sits right below the breakout point 1.3531, only four pips away, and here a beginner must be particularly careful. Such proximity means one touch cannot determine the move's character. If price pierced 1.3527, reached 1.3531, and firmly closed above, that is a breakout, and you must not sell. If it pierces into the zone and quickly returned below, the return model applies. The timing difference between these scenarios can be minutes, so it's wiser to skip the first reaction in this zone and wait for clarity.
The lower boundary for the pound is 1.3492, located slightly below the breakout level 1.3498. Here I look for longs if a downside spike proves false and price pulls back up. The situation mirrors the upper level, just inverted. A short dip under the level, followed by a quick return, creates a buy opportunity aiming back into the range; a close below cancels the return scenario and turns the pound into a breakout setup with targets 1.3474 and 1.3457. Given the overall background is against European currencies, I approach longs from this zone more cautiously than usual and set a short target. In both cases, I place the stop at the extreme point of the spike, and not at the nearest round number.
*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.
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