U.S. Dollar Remains Strong
Dmitriy Gurkovskiy | Oct 04, 2021 11:32
At the start of the week, EUR/USD remains under pressure and is currently moving close to 1.1600. Almost everyone likes the “greenback” right now and it’s quite easy to explain: investors are waiting for the US Fed to back up its words about an early reduction of the QE programme with deeds.
Last Friday’s statistics published by the USA were rather mixed. Personal Spending in August increased 0.8% m/m, which is more than expected. At the same time, the July reading was revised downwards, 0.1% m/m and that made the situation quite questionable. Personal Income increased by 0.2% m/m.
On the other hand, the numbers for September were good. For example, the ISM Manufacturing PMI improved up to 61.1 points after being 59.9 points the month before. The Markit Manufacturing PMI showed 60.7 points after being 60.5 in July. Revival of businesses and improvement of sentiment are positive signals. It means that companies and enterprises do not see big risks in the upcoming tightening of the Fed’s monetary policy.
In the H4 chart, after completing the descending wave at 1.1600, EUR/USD is forming the first ascending impulse towards 1.1656 and may later correct to reach 1.1598, thus forming a new consolidation range between the two latter levels. After that, the instrument may break this range to the upside and start another correction with the target at 1.1717. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is steadily growing towards 0. Today, the line is expected to break this level to the upside and continue growing towards new highs.
As we can see in the H1 chart, after finishing the ascending structure at 1.1600 along with the correction towards 1.1583, EUR/USD is growing to break 1.1608 and may later consolidate above the latter level. After that, the instrument may break this range to the upside and continue trading upwards with the short-term target at 1.1632. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: its signal line is moving below 50, a breakout of which may lead to further decline to reach 20. Later, the line is expected to rebound from 20 and resume growing towards 80.
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By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
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