Buyers of the US dollar are confident that the US dollar has strong grounds for a further increase. The greenback is trading at the levels logged in September 2020 against a basket of six major currencies. Expectations of the QE tapering are boosting the US currency.
Market participants are looking forward to the event. However, Jerome Powell supposes that consumer prices may stay high longer than expected. At the same time, he insists that it is a short-lived phenomenon. As a result, traders have come to their own conclusion.
Markets are waiting for the next meeting that is scheduled for November. Jerome Powell hinted that the regulator would start the reversal of the QE policy in November. Notably, other representatives of the Fed think that it is better to raise the key interest rate next year because of inflation risks.
Thus, the regulator may announce a reduction of $120 billion in monthly bond purchases on November 2-3. Of course, the Fed will closely monitor the country's economic condition. The economy should continue to expand. At the moment, macroeconomic reports are quite strong. On Thursday, a new bulk of information was disclosed.
According to the final data, the US GDP advanced by 6.7% on a yearly basis. Economists had expected an increase of 6.6%. This report supported the greenback. At the same time, data on the labor market capped the dollar's growth.
Thus, the number of first-time claims jumped by 11 thousand to 362 thousand compared to the previous week. Analysts had foreseen a decline to 335 thousand. However, this report will hardly stop the Fed.
Now, the US debt ceiling is the thorniest issue that may affect USD. However, it is just a short-lived problem. The government is likely to raise the ceiling again.
In general, the US dollar does not and will hardly have any obstacles. Of course, it may inch down, but it is a usual thing. If the bullish impulse remains the same, next important levels will be located at 94.75 and then - at 95.00.
However, a short-lived downward correction is quite possible due to overbought conditions. The greenback is likely to gain in value, if it consolidates above the peak of 93.75 logged in August.
At the same time, the euro has been dropping since September. The situation will hardly change in the near future. The pair has recently broken the important level of 1.1600. Now, the main question is whether the euro is able to rebound. The single currency may decline really deep. The next key support level is located at 1.1230.
The euro's dynamic depends on the US dollar. On Thursday, the greenback slowed down a bit. However, according to both fundamental and technical analyses, the currency will continue attracting investors.
Notably, Thursday is the last day of the month and of the quarter when investors can revise their portfolios. Since the US dollar jumped, it may feel downward pressure. However, the euro/dollar pair may go on falling.
The next support level is located at 1.1590. Then, the levels of 1.1550 and 1.1500 logged last year will act as support.
Resistance levels are located at 1.1610, 1.1660, 1.1680, and 1.1700.
