EURUSD over the clouds. Overview for 11.11.2022

On Friday, the market major is heading up. The current quote is 1.0260.

The market is buying actively because the attitude to the future actions of the Federal Reserve System has changed. After the inflation statistics in October for the currency sector were published, a whole revolution happened.

So, the CPI in the US over October grew by 0.4% m/m against the forecast 0.6% m/m. On the year scale, inflation dropped to 7.7% from 8.2% earlier. Base inflation dropped to 6.3%, which is lower than the expected 6.5%.

Sure, the Fed bases its inflation decisions on a different component – the Core PCE. Yet the base CPI remains in focus.

Investors reacted unambiguously: the probability of the Fed being more restrained in December had increased. There are no official comments or statements concerning this, so we may only guess about the sentiment.

However, investors now think that the Fed will leave the rate by 25 or 50 base points, while previously the only valid option was 75 base points.

The US dollar crashed under such a flow of optimism.