Today, the Forex market is experiencing sluggish dynamics and low activity of traders in the absence of new fundamental drivers. The dollar, on the whole, keeps positive dynamics; however, some market participants have doubts about its further active growth.
As the president of the Federal Reserve Bank of Chicago Charles Evans said on Monday: "it would be nice to wait, and wait for the data" before raising rates again. Evans added that the leaders of the Fed should take a pause to make sure of a real acceleration of inflation. The Evans statement is the second in the same vein after the statement made on Friday by the President of the Federal Reserve Bank of Dallas Robert Kaplan that:
We should be extremely cautious about raising interest rates. It is necessary to wait for the acceleration of inflation, before advocating for a further tightening of monetary and credit policy.
In general, the leaders of the Fed are optimistic about the near future of the US economy, however, some macroeconomic indicators coming out of the country recently come out worse than the previous and below the forecast values.
On Tuesday (12:30 GMT) there will be data on the current account of the US balance of payments for the first quarter. It is expected that the negative balance has increased to 124 billion dollars.
The president of the Federal Reserve Bank of Chicago, Charles Evans, called yesterday:
To raise rates very smoothly and slowly to reduce the balance" [of the Federal Reserve System, as it will] provide the necessary support for the timely achievement of the target inflation rate of 2%.
Now, judging by the futures market, investors are assessing the probability of another increase in Fed rates this year, about 47% (against 41% last week). To increase investor confidence in the Fed's determination to tighten monetary policy, which will give a new positive impulse to the dollar, strong macro data should resume from the US.
Also, attention should be paid to the statements of the representatives of the Fed scheduled this week. Fed President Boston CEO Eric Rosengren, Dallas Fed Executive Director Robert Kaplan and Federal Reserve Chairman Stanley Fischer will deliver a speech on Tuesday, and on Friday - Fed Governor Jerome Powell and Fed President James Bullard.
If the Fed representatives adhere to rigid rhetoric about the Fed's plans to raise interest rates and reduce the balance of the Fed, the dollar will receive a missing momentum for its further growth. If they say in the same spirit as Charles Evans, the dollar will gradually begin to give way to positions in the foreign exchange market.
On the one hand, the Fed seems to be tightening its monetary policy, and on the other hand, it is not against the weakening of the dollar. It is not worthwhile, therefore, to discount the recent statements by US President Donald Trump that the US needs a weak dollar.
At the beginning of today's European session, the pair EUR/USD remains in the range between short-term levels - resistance 1.1155 (144-period moving average) and support 1.1115 (200-period moving average on the 4-hour chart).
Technical indicators on the 1-hour, 4-hour, daily charts went to the side of sellers.
Negative dynamics of the EUR/USD is maintained. In case of a breakdown of the support level of 1.1150, the decline may resume with new strength, and the pair will go deeper into the uplink on the daily chart, the lower limit of which lies near the key support level 1.0915 (200-period and 144-period moving averages on the daily chart).
Back to consideration of long positions on the EUR/USD pair is possible only after the pair returns above the level of 1.1230.
Support levels: 1.1115, 1.1100, 1.1080, 1.1000, 1.0950, 1.0915
Resistance levels: 1.1155, 1.1190, 1.1230, 1.1280, 1.1340, 1.1600
Trading recommendations
Sell in the market. Stop-Loss 1.1210. Take-Profit 1.1130, 1.1115, 1.1080, 1.1000, 1.0950, 1.0915
Buy Stop 1.1210. Stop-Loss 1.1140. Take-Profit 1.1230, 1.1280, 1.1340, 1.1600
