Inflation is undeniably one of the most important topics investors pay attention to. This is because central banks take them into consideration whenever they make decisions on monetary policy.

And now, since commodity prices are rising and problems in the supply chain persist, investors are becoming increasingly concerned that inflation will surge at any moment. But to date, the Federal Reserve is unwavering on its decision to keep their policy as soft as it could be, at least until target levels are achieved.

The question that greatly troubles investors is whether the current price hike is temporary, or will it go on for quite a long time, which will result in an unwanted inflationary surge. Fed Chairman Jerome Powell admitted that such may occur in the future, but reassured that it would not be a problem.

At the same time, US Treasury Secretary Janet Yellen commented that interest rates may increase some time in the future to keep the US economy from overheating. But later on she took back her statements and said she did not intend to give out projections. In any case, the markets reacted with a sharp rise in the dollar and fall in US stocks.

But honestly, inflation is not the only problem investors should focus on. Next year, the Federal Reserve will have new leaders, which means that the programs and policies of the central bank may change.

Experts say this topic will reach a certain peak in the coming months, although so far there are no signs that a decision has been made, and until now Powell has no competitor in the position. Nevertheless, the central bank should have additional trump cards up its sleeve to help Powell keep his seat.

Going back to the US economy, the ADP published a report on the labor market yesterday, indicating that employment in the private sector jumped to 742,000 in April, up from its previous record of only 565,000. This is the highest performance the sector showed since September 2020, and the main cause is the sharp increase in jobs in the manufacturing sector - 106,000. Employment in the service sector also climbed to 636,000.

And on Friday, the US Department of Labor will release a monthly employment report, to which analysts expect a rise of around 978,000. The unemployment rate, meanwhile, is projected to drop to 5.8%.

Talking about the service sector, the ISM reported that business activity in the US slowed a bit this April, recording only 62.7 points in the index, slightly lower than its previous record of 63.7 points. Nonetheless, the value is above 50, which means that the activity is increasing and that the US economy is recovering in the wake of the coronavirus pandemic.

With regards to the forex market, there is a strong selling pressure on the euro, in which a break below 1.1980 will certainly lead to a further decline towards 1.1950 and 1.1920. But if the quote returns to 1.2025, the euro will have a chance to climb up to 1.2070 and 1.2130.