Since the beginning of the trading session, the euro and the pound sterling have been actively losing their positions. Of course, there are a lot of reasons for the deprecation, including the ECB’s meeting results.
The pound sterling is losing ground amid the data that turned out to be significantly below the forecast. Thus, the UK construction PMI advanced to 28.9 points from 8.2 points. Economists had expected a rise to 32.0 points.
At the same time, the euro is dropping amid a decline in the eurozone retail sales. Thus, the decrease accelerated to 19.6% from 8.8% in the previous period. Despite the fact that the current figures exceed the forecast, the consumer demand is nosediving. Besides, Europe is confidently entering deflation.
A simultaneous drop in prices and sales forces the ECB to flood the economy with cash. Thus, market participants are almost sure that today, Christine Lagarde will extend the quantitative easing program. Of course, this action may have a negative impact on the national currency. Thus, the euro is likely to slide further. Moreover, the British pound may also decline.
However, the US dollar may have other reasons for a rise. For example, the unemployment claims data. Analysts suppose that the number of the first-time claims will gradually decrease. Moreover, the number of continuous claims is also expected to drop for the second week in a row. Such figures may have an extremely positive effect amid an unprecedented climb in the number of unemployed people. The fact is that it is a good sign of the labor market and the whole economy recovery.
Yesterday, the euro/dollar pair was moving towards the level of 1.1240. The candles’ shadows managed to break the level. However, the price failed to consolidate near the mentioned level on the four-hour chart.
Today, we can see that the pair has already lost some of its positions. Long positions are still overheated. To stabilize the situation, the quote should decline to 1.1150.
It is quite possible that at the moment, the price is moving back to 1.1180. The price should consolidate below the level in order to avoid fluctuation between the levels of 1.1180 and 1.1250. If the price consolidates below 1.1180, the level of 1.1150 could be the first sign that the pair may drop lower to 1.1100-1.1080. Buy positions can be opened only above 1.1260with the target at 1.1300-1.1350.
The pound/dollar pair hit the upper limit of the range at 1.2620. Thus, market participants managed to reach the expected level of 1.2500.
If the price consolidates below 1.2475, the downward
trend is likely to resume. Thus, the quote may fall to the level of 1.2350.
According to the alternative scenario, the pair may fluctuate within the levels of 1.2500 and 1.2620.
Buy positions can be opened above 1.2550 with the target at 1.2610.
That’s all for now. See you on InstaForex TV channel in several hours. We will take a close look at the US trading session.
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