The inflation is temporary | 09 Desember 2021

09 Desember 2021, EUR/USD

The inflation is temporary

EURUSD trading plan:

Euro zone inflation will take longer to fall back to target than earlier thought but so far there is no evidence that high prices are becoming embedded in wages, ECB Vice President Luis de Guindos said. While the ECB has maintained that inflation is temporary and will come back under target on its own, a growing number of policymakers are voicing their concern that a less benign outcome is also possible, so the bank should curb stimulus. "We are fully convinced that inflation will start to decline at the beginning of next year and in the second half of next year inflation will start to decelerate even more and will converge with our target of 2%," de Guindos told a conference. De Guindos also played down the impact of high price growth, arguing that there's no evidence that wages were reacting to temporary price pressures. The European Central Bank should not change the sequence of its future policy moves, even if those risks pushing up government borrowing costs, but may need a backstop to prevent market fragmentation, board member Isabel Schnabel said. This is a negative signal for the euro.

Investment idea: sell 1.1350 and take profit 1.1290.

David Johnson
Analyst of «FreshForex» company
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