EUR/USD: The Dollar Remains Under Pressure
Yuri Papshev | May 18, 2017 10:45
After four days of active growth against the background of the first weak inflation indices in the US for April, published last Friday, then mixed data on the dynamics of construction of new homes in the US and strong data on the foreign trade balance of the eurozone, published on Tuesday, the EUR/USD reached today's new annual maxima near the level of 1.1170.
The growth of the pair was promoted yesterday by another buzz around the US President Donald Trump. In the media yesterday, there were reports of Trump's alleged request to former FBI director James Comey to stop the investigation against Michael Flynn, who had previously served as adviser to the US president for national security. This news fueled the negative sentiment of Tramp's opponents after earlier reports that Trump allegedly handed over sensitive information about ISIS to Russian authorities, which could damage the national security of the United States.
Against this background, yesterday, talk about possible impeachment of Trump increased.
Today, there is some recovery in the US dollar on the foreign exchange market, and the EUR/USD pair is declining. According to economists, under the sharp strengthening of the euro there is no fundamental basis. The EUR/USD is growing mainly against the background of the weakness of the dollar and the stabilization of the political situation in Europe after the election of the new president in France.
At any moment, the same strong downward correction may begin, as well as the growth of the EUR/USD pair, which has been observed for several days.
For today, the ECB Chairman Mario Draghi's speech is scheduled to begin at 17:00 (GMT). It is likely that he will again remind that the recovery of the economy in the eurozone, according to the ECB, is not enough to start curtailing the program of monetary stimulus. Last week, Mario Draghi again noted that "it is still necessary to maintain the current very significant monetary stimulus for further growth" of the eurozone economy.
The volatility in the EUR/USD pair may also grow today at the time of publication (11:30 GMT) of the report from the ECB's last meeting on monetary policy, and also at the beginning of the US trading session, when at 12:30 (GMT) the weekly report of the Ministry of Labor's number of new applications for unemployment benefits. The forecast is expected to grow to 240,000 versus 236,000 for the previous period, which should negatively affect the dollar.
At 5:15 pm, FOMC Fed Loretta Mester will perform. It will be interesting to hear what she thinks about the dynamics of the US macroeconomic, which recently come out with weaker indicators than expected, and about the escalating political situation in the US. As another representative of the Federal Reserve, Neil Kashkari, said yesterday, "financial stability is the key mission of the Fed."
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Support levels: 1.1100, 1.1080, 1.1035, 1.1000, 1.0950, 1.0900, 1.0875, 1.0820, 1.0800, 1.0780
Resistance levels: 1.1156, 1.1170, 1.1200, 1.1280, 1.1340
Trading recommendations
Sell Stop 1.1115. Stop-Loss 1.1175. Objectives 1.1100, 1.1080, 1.1035, 1.1000, 1.0950, 1.0900, 1.0875, 1.0820, 1.0800, 1.0780
Buy Stop 1.1175. Stop-Loss 1.1115. Objectives 1.1200, 1.1280. 1.1340
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