Some weakening of geopolitical tensions in the Middle East allowed the US dollar to receive support, but this is unlikely to be a broad basis for its noticeable growth, and there are a number of reasons for this.
The first and fundamental reason is that the Fed actually resumed quantitative easing from the decline of last year, pumping the financial system with liquidity, which is a strong factor in its weakening amid a wide dollar supply. And although the regulator did not call these measures quantitative easing (QE) by analogy with those that B. Bernanke started in his time, the essence remains the same, which then led to a noticeable drop in the exchange rate of the American currency in the wake of many years of rally in the stock market.
The second political reason is D. Trump's passionate desire to "have" a weak dollar for the American economy, which will allow it to compete more successfully in the currency markets. First of all - this, of course, is necessary for manufacturing companies within the United States to provide more competitive conditions in the global markets for their goods and services. The president is an ardent supporter of the revival of the national industry, as he had repeatedly stated before.
Moreover, the third reason is the factor of trade tension with China, which has faded into the background on the wave of an escalation of the US-Iranian crisis, but has not disappeared and will appear from time to time, popping up in the headlines.
And the last reason, in our opinion, is the most important, but which is often ignored by the markets because of the first three, is still weak inflation and a huge imbalance in the country's trade balance, which makes the dollar weaker in relation to other currencies.
But back to the important event of today - the publication of US employment data. According to the consensus forecast, the US economy is expected to have received 164,000 new jobs in December last year, while the unemployment rate remained at around 3.5%. Thus, it can be assumed that against the background of a certain pacification of the conflict between the States and Iran, as well as if employment data are higher than the forecast, the dollar will receive limited support, but no more, since the fundamental factors listed above will not allow it to resume a steady increase in currency exchange markets. And such a short-term increase will be considered by investors, probably, as a good reason for its short sales.
Forecast of the day:
EUR/USD is consolidating above 1.1100 pending the publication of US employment data. If they are above the forecast, the United States will put pressure on the pair and the price will then break through the level of 1.1100 and rush to 1.1065 and even lower to 1.1050.
USD/CAD is trading above 1.3050. This may lead to continued local recovery of the pair to 1.3100, and then to 1.3170 in case that the employment data in Canada is weaker than the forecast, and on the contrary, it is higher in the USA.
