Democrats in the U.S. Senate used their advantage to take an important step toward the biggest change in decades - reducing poverty, taking care of the elderly and protecting the environment - by putting another mind-boggling $3.5 trillion into the budget. President Joe Biden's economic agenda appeared to Republicans in all its glory. The new changes completely undermine all Republican efforts to reduce the tax base, because it is clear that this amount of money will be difficult to raise just "out of thin air" or with the help of the printing press. That leaves us to work hard to change the tax laws. The Democrats propose tax cuts for the middle class, including an extension of the temporary pandemic tax credit for children. But the bulk of the cost would come from repealing the tax cuts for corporations and wealthy households, which were a signature legislative achievement of former President Donald Trump. The Democratic budget plan also includes paid family leave, two years of free community college tuition, and new dental, vision and hearing benefits for Medicare holders.

It is worth noting that the U.S. continues the European-backed climate change resolution. The proposed economic package contains measures such as pollution charges on imported products, greenhouse gas emissions, and expanded plans to electrify the federal auto fleet. Senate Budget Chairman Bernie Sanders said the package would address "the long-forgotten needs of working families, not just the 1 percent and wealthy campaign contributors," clearly alluding to the Republican ideology that has been more centered around past President Donald Trump. In his words, "it will restore the faith of the American people in a government that works for all of us, not just some."

The U.S. dollar fell against its major currencies Wednesday as inflation fears eased slightly. That came right after data showed that U.S. prices did not rise as much as they did last month. Reflecting higher prices for housing, food, energy and new cars, the Labor Department released a report showing that U.S. consumer prices rose in line with economists' estimates. The report showed that the consumer price index rose 0.5 percent in July after jumping 0.9 percent in June. Economists had expected consumer prices to rise 0.5 percent, leading to the largest annual increase in the index since June 2008. Compared to the same period in 2020, consumer prices rose 5.4%. The growth rate was expected to fall slightly to 5.3%. As indicated in the report, the monthly increase in consumer prices was due in part to a 1.6% jump in energy prices and a 0.7% increase in food prices. As for core inflation, which excludes volatile categories including energy, the index rose only 0.3% in July after jumping 0.9%. Economists had expected core prices to rise 0.4%. Along with increases in home and new car prices, base prices for recreation, health care and personal care also rose slightly. The year-over-year increase in the core index slowed to 4.3 percent. Economists note that June was the peak of the annual inflation rate as the strong base effect wears off and wholesale used car and truck price increases declined significantly. But it is possible that price increases associated with the resumption of the economy and ongoing supply chain problems will continue to keep inflation high and stable. The only thing that will change is the supply and demand imbalance. The producer price report will be released as early as today. Economists expect prices to rise 0.6% in July after a jump of 1.0%.

The growth of the European currency, as well as other risky assets immediately after the publication of the report occurred due to the reduction of fears about more aggressive actions of the Federal Reserve regarding the monetary policy. This increased the demand of traders for a number of risky assets. But we should not underestimate the growth of prices during the summer period, as the wave-like surges will continue, which will make the central bank to keep its "hand on the pulse" - the bull market for the American dollar will continue to be observed, with only small moments of correction. It is worth recalling that the European Central Bank is just looking at what is happening with inflation and the economy as a whole, as the situation there is less aggressive, as evidenced by the recent data on inflation in the region. Most likely, the market will be in a sleepy state during the last summer month of 2022, and this kind of reports will bring it to life just for a little while.

Speaking about the inflation in the Eurozone. Yesterday there was also a report on consumer prices in Germany, which rose at the fastest rate in more than 27 years. As the final Destatis data showed Wednesday, consumer prices rose 3.8 percent year-over-year in July this year, after rising 2.3 percent in June. This was the biggest increase since December 1993, when inflation was 4.3 percent. However, this came as no surprise as the sudden base effect that occurred in July 2021 was expected. The repeal of the VAT exemption that was introduced last year made up for the delayed base effect in full, which the European Central Bank is quite happy about. In July, food prices rose 4.3% and the cost of services rose 2.2%. The core consumer price index excluding energy rose only 2.9% year-on-year. As for EU harmonized inflation, it accelerated to 3.1% in July, in line with preliminary estimates. Inflation data in Italy was of little interest to traders, but even there prices rose more than expected in July. The report from the statistics bureau Istat said consumer prices rose 1.9% year-on-year, falling short of the 2.0% target set by the European Central Bank. On a monthly basis consumer prices rose 0.5%.

As to the EURUSD technical picture, the bulls regained confidence and after an active attack on the resistance at 1.1738 managed to break it down and headed towards the new level 1.1762, which will be the main target. Its exit will open for the buyers of risky assets a direct way to the highs 1.1790 and 1.1810, where again there will be some problems with making an uptrend. It will be possible to talk about the pressure on the trading instrument only after the return of the support at 1.1735, which will push EURUSD already to the area of the monthly low at 1.1710.

The British pound continued its activity after the release of the inflation data in the U.S. and was able to significantly recover against the dollar. At the moment the buyers will focus on the breakthrough of the resistance at 1.3895, the advance beyond which will provide a direct way to the highs of 1.3925 and even to the local monthly resistance at 1.3980. It will be possible to speak about return of pressure on the trading instrument only after the bears will return the support at 1.3845 that will take the pound down to the base of the 38th figure, which in addition is the minimum of the month.