The slew of strong economic data from the US fosters reassessment of expectations regarding the Fed and pushes the dollar to new highs. EURUSD has tested a new low thanks to a powerful fundamental catalyst - the US retail sales report released on Tuesday. Two readings from the report beat forecast by a decent margin - broad and core retail sales, which indicates a fairly strong consumer momentum in the US in October. The growth of core sales amounted to 1.7% against the forecast of 1.0%. Foreign trade data indicated higher than expected import and export prices, which also supported risk appetite. For USDJPY, there is an opportunity to retest 115.

The dollar index, in accordance with our expectations, has reached the upper border of the ascending channel (the level of 96 points):

US home sales data is the only report that can cause at least some market reaction, however, market participants focused on the speeches of Fed officials. Fewer of them call inflation temporary and take its threat more and more seriously. The main attention of market participants will be focused on Williams' speech.

EURUSD broke through 1.13 and hit a low at 1.1265. The correction was quite fast and strong today, but the rally was stuck around 1.131. The strong dollar was the basis of the movement, however, the rise in gas prices in Europe had a negative impact on the value of the euro, as the European Union is a large importer of energy resources and the pressure on the exchange rate due to the trade deficit increased.

The ECB is to publish a report on financial stability today. The regulator is expected to issue a warning about the risks of correction in asset prices. The report may have a moderately positive effect on the European currency, and it will most likely develop a rebound from the 1.13 level, as the fundamental background for the dollar has somewhat exhausted itself. Consolidation is expected around 1.135.

In turn, for the British pound, the CPI jump to 4.2% on an annualized basis against the consensus of 3.9% significantly increases the likelihood that the Bank of England will raise the rate in December. That is why the pound is holding up quite confidently despite the strengthening of the dollar. However, the GBPUSD pair remains below the important downward resistance line and without a decisive breakout, growth is questionable.