Alfa-Forex: EUR / USD – euro risks further downward correction

09 February 2021

For the first time since December 1 of last year, the euro against the dollar in the forex market dropped below the psychological level of 1.2000 due to positive macroeconomic statistics from the United States. The key factor behind the dollar’s strengthening was the recovery of the labor market in January: the total employment from the ADP (Automatic Data Processing) agency showed an increase in new workers of 174 thousand, the report on the non-farm labor market (Nonfarm Payrolls) added 49 thousand jobs, and the overall unemployment rate fell from 6.7% to 6.3%. The indicators of business activity in the services sector continued to improve: the PMI index from Markit in January rose from 57.5 to 58.3 points, the ISM index from the PMI added 1 point, rising to 58.7 points. Against this background, the latest December data on unemployment in the Eurozone did not make a very favorable impression: the indicator did not move from the level of 8.3%; The region’s GDP in the IV quarter of 2020 decreased by 5.1% (in annual terms).

Investors’ attention this week will continue to be riveted on the US statistics, where the main indicator will be the January CPI indicator (to be published on Wednesday). According to the consensus-forecast of experts, the annual CPI will grow by 0.1% to 1.5%, which is far from the Fed’s target levels of 2-2.5%. But against the backdrop, the US economic climate is encouraging, which could ultimately cause the Treasury to refuse to expand its quantitative easing program this year.

The EUR / USD pair consolidated below the resistance of 1.2160, moving into a trading range with the lower border of 1.1900.

RUBLE – optimism returns

Market participants in ruble instruments are once again looking at the national currency with optimism. Sanctions risks are starting to leave the field of vision of investors due to the absence of significant negative consequences for the national economy. The West is likely to focus on personalizing new restrictions, which should not affect the industry situation in Russia. Against this background, demand in the public debt market is gradually recovering, and the rise in oil prices above $ 60 per barrel of Brent has increased investor interest in carry trade operations.

Next Friday, February 12, the Bank of Russia will hold a scheduled meeting on monetary policy. The regulator is expected to keep the current level of the discount rate at 4.25% and, most likely, will confirm its intention to temporarily abandon further easing of monetary policy. The January inflation report recorded an increase in the consumer price index by 0.7%, it remained above the target level of 4% in annual terms. Under the current conditions, the profitability of ruble instruments remains attractive for long-term players.

The USD / RUB pair is forming a rebound from the resistance of 76.60 rubles towards the lower border of the trading channel of 72.70 rubles per dollar.

The EUR / RUB pair maintains a trading range of 88-94 rubles per euro.

This information is not investment advice.

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