The dollar continues to recover in the currency market on the eve of today's publication: minutes from the last meeting of the Fed (18:00 GMT) and on Friday (12:30 GMT) - data from the US labour market for June.
The WSJ US dollar index increased by another 0.11% to 88.36. Now the Fed is planning to start reducing the balance sheet, which is about $ 4.5 trillion, in September, and the rate will be raised in December.
President of the Federal Reserve Bank of Chicago, a member of the Committee on open market operations with the Federal Reserve with the right to vote on monetary policy, Charles Evans said last month:
We need to take on the balance, start cutting it and prepare for a rate hike in December.
At the same time, despite the active decline from the beginning of the month against the dollar, the euro today remains stable in the foreign exchange market and is growing with the today's opening.
As ECB representative Peter Prat said yesterday during his speech in Rome:
Our [ECB] task has not been fulfilled yet. We need to maintain patience and perseverance. We need to be patient, because it takes more time for inflation to be surely reflected in the data.
In the minutes published today, the Fed will probably confirm its intentions. According to the CME Group, investors take into account the 62% probability that the Fed will implement another rate hike in 2017. Higher rates usually support the dollar, making American assets more attractive to investors.
Against this background, the dollar will continue to grow in the foreign exchange market, including the EUR/USD pair. A signal for further, so far corrective, decline in the EUR/USD will be the break of the short-term support level 1.1330 (200-period moving average on the 1-hour chart). The targets will be support levels 1.1285 (Fibonacci level of 23.8% of corrective growth from the lows reached in February 2015 in the last wave of global decline of the pair from the level of 1.3900), 1.1250 (144-period moving average and the bottom line of the uplink on the 4-hour chart).
The positive dynamic of the EUR/USD is still being preserved. Critical for the uptrend in the EUR/USD pair will be the breakdown of the support level 1.1210 (200-period moving average on the 4-hour chart).
Support levels: 1.1285, 1.1250, 1.1210, 1.1120, 1.0950
Resistance levels: 1.1330, 1.1350, 1.1440, 1.1500, 1.1600, 1.1785
Trading recommendations
Sell in the market. Stop-Loss 1.1360. Take-Profit 1.1300, 1.1280, 1.1215, 1.1170, 1.1140
Buy Stop 1.1360. Stop-Loss 1.1310. Take-Profit 1.1400, 1.1440, 1.1500, 1.1600, 1.1785
Disclaimer: All presented material express the personal views of the author and are not a direct guide to conduct trading operations.