Instead of showing 3.3 percent growth, the homes sales in the U.S. primary market decreased by 3.4 percent yesterday while the dollar continued to strengthen. On the other hand, this was influenced by a portion of Yellen's statement saying that the Fed will refinance the rate even if inflation will not rise to 2.0 percent. This is understandable since the part of the criteria by the regulator is the state of the labor market and the benchmark for it is the unemployment rate of 5.0 percent which is now 4.4 percent. Hence, inflation could drop to as low as 1.5 percent.
The dollar strengthens in anticipation of today's presentation to the Congress of Donald Trump's plan for tax reform. Back in the course of the pre-election campaign, the candidate for the presidency of the United States constantly announced his intention to carry out the tax reform and to reduce the corporate income tax in particular. Despite the fact that there is no fixed tax rate in the US, the average rate can be calculated which companies pay and it is 38.9%. Any decrease in corporate income taxes will have a positive impact on the condition of U.S. companies, as well as on the capitalization of U.S. stock indices. It is expected to be proposed as a reduction of the average tax rate below 30.0%. Another argument in favor of the dollar orders for durable goods, which can grow by 1.0%.
All points to the fact that the euro will continue to grow despite the strong overbought dollar.
The EUR / USD pair will continue its decline towards 1.1715.
The GBP / USD pair may drop to 1.3305.
