Since the beginning of this week, the US dollar has been showing positive dynamics relative to the basket of world currencies. The dollar index (#DX) reached three-month highs. Last week, the Fed, as expected, kept the key interest rate range at the previous level of 1.50% -1.75%. Further monetary policy adjustment of the regulator will depend on future economic releases. An outbreak of coronavirus from China is still in the focus of investors’ attention. At the same time, concerns about the further spread of the epidemic have declined, that improved sentiment in the financial markets. World stock indexes moved away from local lows and closed in the green zone. Oil quotes have been growing after a prolonged fall.
Currently, investors have taken a wait-and-see attitude before the publication of the US labor market report for January, on Friday, February 7. These statistics may affect the Fed's views on further monetary policy adjustments.
Recent reports from the US were optimistic. Preliminary data from ADP indicated an increase in the number of people employed in the nonfarm sector of the country by 291K, which is higher than the forecasted value of 156K. The consumer confidence index rose to 131.6 compared to market expectations of 128.0. ISM non-manufacturing PMI accelerated from 54.9 to 55.5.
Experts expect improvements in key indicators of the labor market: the number of people employed in the US nonfarm sector will accelerate to 160K from 145K; the growth in average hourly earnings will be 0.3% (m/m) in comparison to the previous value of 0.1% (m/m); the unemployment rate will remain unchanged at 3.5%. We recommend paying attention to the difference between the actual and forecasted values of the indicators.
Let’s consider the current technical pattern on the EUR/USD currency pair
- Support Levels: 1.0990, 1.0950
- Resistance Levels: 1.1020, 1.1040, 1.1065
- - The price has fixed below 50 MA and 100 MA;
- - The MACD histogram is in the negative zone.
The EUR/USD currency pair has become stable after a prolonged fall. The trading instrument has reached key lows. Currently, EUR/USD quotes are consolidating. The local support and resistance levels are 1.0990 and 1.1020, respectively. The single currency has the potential to further decline. Indicators signal the power of sellers:
Nevertheless, we recommend opening positions from key levels.
If statistics from the US turn out to be positive, we expect a further drop in the EUR/USD quotes. The movement is tending to 1.0950-1.0900.
An alternative may be the recovery of the EUR/USD currency pair to 1.1050-1.1090.
When tracking positions, we recommend using a trailing stop.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.Open Account