In the American session, the dollar value dipped amidst growth in risky assets. This was a direct consequence of the US Treasury’s decision to drop its designation of China as a currency manipulator - the move was revealed as part of its semi-annual report.
Today’s events (GMT 3):
- 11:30 Eurozone: ECB’s Mersch Speech.
- 16:30 USA: Consumer Price Index ex. Food & Energy (MoM) (Dec).
- 17:00 USA: Fed's Williams speech.
- 22:00 Monthly Budget Statement (Dec).
On Monday, it was assumed that a correction to the 1.1105 mark would take place before any growth in the euro was seen. As it turned out, fundamental factors kept its value above the balance line, and subsequently, the price strayed away from it. By the close of European trading, bulls had managed to break the trend line which was positioned at 1.1133.
The pair is rising in a complex formation, making it difficult to predict any movement. NFP report data was weak, yet the powers that be were quick to remind of the strong labor market, and reassure that weak NFP data will not affect the upcoming decision on interest rates. Market players predict that the US Federal Reserve will maintain its current rates until November.
In today’s major news events, the US is set to release the Consumer Price Index for December. The Index is important for both the Fed and the US dollar. A rise in inflation will trigger a strengthening of the US dollar, a reduction will cause the currency to weaken.
The focus of market players is centred around the long-awaited signing of the US-China trade agreement. Vice Premier of the State Council of the PRC Liu He has already arrived in the States. This event is hotly anticipated by traders, with President Trump's tweets on the topic also likely to influence the markets.
The current EURUSD exchange rate is 1.1138, with the price sitting on the trend line. If a working channel for upwards movement is built, then support will be found around the trend line at 1.1125. According to this forecast, we can expect a fall to 1.1125 with a subsequent increase back up to 1.1155 to follow.