Currency forecast: dollar awaits correction
Last week showed that the dollar was growing steadily almost until Friday evening. The Fed unexpectedly optimistic about the prospects for the US economy, and against this background, the euro was somewhat fading, although there were no objective prerequisites for this. It is possible that the dollar will spend the next four trading days in a comfortable correction phase.
Alpari experts noted that on Monday, the US dollar entered the correctional phase after a week-long growth. The response to European macro statistics was weak, although some indicators improved. Business activity decreased in the manufacturing sector of Italy and France, grew in Germany and remained at the level of September in the Eurozone.
According to Vladislav Antonov, an analyst at the company, “The business activity index in Italy in October was 50.7 against the forecast of 51.0 and the previous value of 50.8. The business activity index in France in October was 49.1 compared with the forecast of 49, 4 and the previous value of 49, 8. In Germany, business activity amounted to 51.7, which is 0.2 higher than the forecast and 0.6 of the previous value. In the Eurozone, the business activity index for October was 51.3 and coincided with the forecast, while it was higher than the September value 51, 1.
The euro / dollar exchange rate from a minimum of 1.3443 recovered to 1.3512. The pair rolled back to the first correctional level. According to my estimates, the rollback should end at around 1.3530. The British pound recovered by 50 points, to 1.5965 after the publication of strong data on the UK. The index of business activity in the UK construction sector in October was 59.4 against the forecast of 58.9 and the September value. ”
Thus, the past week for the euro-dollar currency pair ended in a logical, although almost unreasonable, advantage of the American currency. Weak data on the German economy, the gradual slide of the region into deflation and the lack of positive changes in employment contributed to the collapse of the euro against major world currencies.
The position of the euro also crippled unexpectedly optimistic assessments of the prospects for the US economy by the Federal Reserve. Forex Club is puzzled why, with high unemployment and a standard drop in retail sales, the situation can be defined as positive with good dynamics. Nevertheless, the euro staggered notably, which, in fact, was the goal of the whole undertaking. Traders can only wait for a better moment for the European currency.
Related topics Forecast: dollar is under pressure
In the coming days, participants in financial markets will continue to count on the prospects for action on the part of the US Federal Reserve, while no one can cancel the movement of the euro against the US dollar. “Objectively or not, it doesn’t matter, the financial market is a crowd, and the crowd follows instincts, emotions, For this reason, the return of the euro to the previously lost positions will be possible only after the crowd is saturated with sales and common sense will prevail again.From the technical point of view, we expect an upward movement with the target of 1.3820, prefer AEM to buy from 1.3540 “, – said the Forex Club analyst Dmitry Voblikov.
In general, the medium-term outlook for the single European currency is not so pessimistic if we take into account the movement of capital in the direction of Europe, however, in the short-term, the regional monetary unit can fall under sales provoked by the expectation of expressing dissatisfaction with the recent strengthening of the euro and a decrease in CPI by the ECB. But for all the necessary time and at least some positive change in market conditions. In the near future, this certainly does not threaten the euro.