The Euro is fighting off attacks. Overview for 14.07.2022

EURUSD is balancing close to parity; the Euro enthusiasts are “holding the fort”.

The major currency air is still looking weak. The current quote for the instrument is 1.0022.

At some point during the day EURUSD is hitting news lows – the latest one is at 0.9996. Most likely, the asset will drop much lower, because bears won’t give up so easily. However, the most time EURUSD is consolidating.

Investors are now turning to US interest rates again. The American CPI showed 9.1% y/y in June, the highest reading in 41 years. In May, the indicator was 8.6% y/y and was expected to show 8.8% y/y. On MoM, inflation added 1.3% after gaining 1.0% the month before. 

The inflation boost means that the US FOMC should be more aggressive. Aggressive enough to raise the benchmark interest rate by 100 basis points instead of 75 like market players are expecting it to. Financial markets have been discussing such a move for several days already and this scenario seems to be getting more and more realistic. 

The International Monetary Fund believes it will be extremely difficult for the US to avoid a possible recession. Consumer spending is going down and the May data confirms it. The International Monetary Fund is expecting the US GDP to gain only 2.3% in 2022 against the previous forecast of 2.9% and believes that American inflation is becoming not only a national problem but a global one as well.