The European currency is awaiting data from the United States, as the said data will partly determine the direction of its movement. On Thursday, January 16, US will receive information on the volume of retail sales for December last year. This information will affect the future dynamics of the euro in the EUR/USD pair.
On Tuesday, January 14, sellers of the EUR/USD pair became more active in the market, trying their best to increase the pressure on the euro. The attempt, however, was unsuccessful, and the classic tandem rose to 1.1139, and entered a downward flow yesterday.
The EUR/USD pair made attempts to grow last Tuesday, but they were in vain. First, the decline reached the range of 1.1120–1.1123. Afterwards, the tandem literally rolled head over heels to the bottom, and at the moment, its quotes is at 1.1108, an extremely low indicator.
The situation improved though on the morning of Wednesday, January 15. The EUR/USD pair went up steadily to 1.1134, almost returning to the starting point of Tuesday. Later on, the tandem tried to overcome this barrier, moving towards 1.1136 and higher, but it did not succeed.
At the moment, the EUR/USD pair is back on track, sliding to 1.1123. Experts believe though that in the near future, attempts to grow will be unsuccessful.
According to analysts, the EUR/USD pair was in a state of so-called "oblong correction" yesterday, where both the euro and the dollar exhibit strong movements. This, however, did not affect the further dynamics of the European currency, which was at a crossroads. It seems to be stuck in limbo, not knowing how to react to the situation and where to move – in the direction of falling or rising.
In relation to this, experts say that the euro is ready to strengthen against the dollar. It just so happens that the buyers of the single currency are constrained by geopolitics, and the news background is more in favor of the American currency. Recall that the two largest participants in the protracted trade conflict, the United States and China, expressed their readiness to sign the first part of a mutually beneficial trade agreement. This gives the dollar an advantage over the euro, analysts say.
Currently, the quotes of the euro are below $1.1155, so there is no need to talk about the recovery of the upward trend. There is little hope though, for relatively good data on industrial production in the Euro area, which will be available today. According to preliminary forecasts, the rate of the decline in industrial production in Europe should slow down from the previous -2.2% to -1.4%. Experts believe that if relatively positive data is released and the agreement between Washington and Beijing is signed, the euro may strengthen its position.
Meanwhile, for the US currency, its current situation is developing successfully. Analyzing the latest data on the labor market in the United States, experts note high indicators that will allow the Federal Reserve not to change the existing policy in the near future. At the same time, according to the report of the US Department of Labor, the level of wage increases in the private sector was only 2.9%, becoming the lowest since July 2018. This indicator does not raise Fed's concerns about rising inflation, so it does not need to raise interest rates to curb inflation. This pleases the buyers of the stock market.
Recall that the inflation rate in the United States is considered one of the key parameters for the financial world. Experts expected inflation to rise from 2.1% to 2.3%, which not only gives an incentive to strengthen the dollar, but also allows the Fed to close the issue of reducing interest rate. Today, we are expecting the report on producer prices in the United States, which has a large possibility of accelerating their growth rate from the previous 1.1% to 1.4%. This once again confirms the fact that there are no reasons for slowing inflation in America.
According to analysts, in the case of positive data from the United States, euro will begin to sink, but this slippage will be temporary. It will be able to quickly regain its position, and create a competitive environment with the dollar. Experts believe that its current intermediate state will end with a rise.
