Fundamental analytics

EUR / USD: Powell weakened dollar position


The currency pair EUR / USD on Tuesday slowed down its growth somewhat against the background of weak data on inflation in the Eurozone, but on the whole it maintains an upward movement vector due to a significant decrease in pressure from the dollar.

Yesterday, Fed Chairman Jerome Powell actually confirmed the statements made on Monday by the President of the Federal Reserve Bank of St. Louis, James Bullard, about a possible easing of monetary policy against the background of the worsening situation in international trade to maintain high growth rates of the US economy. Powell noted that the regulator is very closely monitoring the escalation of foreign trade tensions and is ready to take appropriate decisions if necessary.

Against the background of recent statements, investors are gradually beginning to lay in the price the likelihood of lowering rates in the United States, which will increase the pressure on the US currency. However, the difficult economic and internal political situation in the EU remains a serious deterrent for investors; therefore, the local growth of the EUR / USD pair cannot be called a change in the global trend.

Today in Europe we are monitoring data on the PMI of the services sector and a report on retail sales. There is a very high probability that the statistics will be below market expectations, which could put pressure on the EUR / USD pair during the European trading session.

In the US, the focus will be on data from the ADP on employment in the non-agricultural sector, which is largely shaped by investors' expectations before the publication of the main report from the Department of Labor, as well as data from the non-production PMI sector from ISM.

On the chart, the struggle continues for level 1.1260, at which the further short-term price movement vector is determined. So far, customers manage to defend all positions taken earlier, which makes the scenario with a breakdown of 1.1260 more likely. In this case, you can count on the further development of the upward movement in the direction of the level of 1.1260.

· Resistance levels: 1.1260, 1.1320, 1.1400.

· Support levels: 1.1240, 1.1200, 1.1170.

The main scenario is a rollback to 1.1240 and resumption of upward movement.

An alternative scenario - consolidation above 1.1260 and growth to 1.1320.

Locally, the news background for the EUR / USD pair remains positive, which increases the probability of a breakdown of the level of 1.1260. Therefore, inside the day, we still consider longs that are worth looking for near the 1.1240 level.


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