Anna Zaitseva, analyst, FINAM Group
On Wednesday, February 24, EUR / USD is consolidating near yesterday’s close at 1.2150, while the DXY dollar index is down 0.14% to trade at 90.037. A day earlier, the single European currency reached 1.21795 against the US dollar, but at the end of the session dropped to 1.21487, and the DXY indicator tried to break down the 90,000 level, but closed at 90.167.
The key event of yesterday was the speech of the head of the Fed, Jerome Powell, before the banking committee of the US Senate. In his comments, Powell noted the uneven nature of the US economic recovery and the persistence of pandemic risks, in connection with which the regulator does not plan to make adjustments to monetary policy in the near future. At the same time, the department expects an improvement in external conditions in the second half of this year against the backdrop of the expansion of vaccination programs for the population against coronavirus infection, as a result of which the country’s GDP by the end of the year may show an increase of 6%.
As for inflation forecasts, the Fed still does not see the risks of a significant increase in consumer prices in the medium term, despite the unprecedented volumes of fiscal and monetary support for the economy.
On the labor market side, the Federal Reserve expects employment to recover to pre-crisis levels could take significant time. At the same time, Powell emphasized that the department focuses precisely on the employment rate, and not the unemployment rate, since the calculation of the latter does not take into account the most vulnerable group of people who dropped out of the workforce as a result of stopping the search for a new job.
From macroeconomic statistics, the final January data on inflation in the euro area was released yesterday. The final estimate of the indicator did not change compared to the preliminary one and amounted to + 0.9% (YoY) compared to -0.3% (YoY) a month earlier.
In the US, data on the S & P / Case-Shiller house price index became known. In December, the indicator increased by 10.1% (YoY) compared with an increase of 9.2% (YoY) a month earlier, exceeding the consensus forecast of + 9.9% (YoY).
Today we should pay attention to the publication in Germany of the final data on GDP for the IV quarter, and in the US – data on new home sales. Also today, Fed Chairman Jerome Paeull will continue to address the Senate.
The EUR / USD rate is consolidating near the 1.2150 level above the 50-day moving average line. If the price consolidates above this level, the growth of quotations is likely to continue, however, the position of the stochastic lines near the overbought zone indicates a limited upside potential.
This information is not investment advice.