Anna Zaitseva, analyst, FINAM Group
On Wednesday, March 24, the trend towards strengthening of the US dollar continues. As of 11:35 am Moscow time, the EUR / USD rate is down 0.16% to 1.18284, while the DXY dollar index is growing by 0.21%, trading near a four-month high at 92.537. A day earlier, the euro weakened against the US currency by 0.72%, while the dollar index rose by 0.66%.
The pandemic situation in Europe has led many economists to revise their forecasts for GDP growth in the region and a reassessment of investment risks, as a result of which the single European currency has come under pressure.
In addition, the US Treasury Secretary Jannette Yellen’s statements in the House of Representatives that tax increases will be required to finance large-scale infrastructure and public projects in the future have contributed to the growth in demand for the US dollar.
At the same time, yesterday’s speech by the head of the Fed, Jerome Powell, somewhat stabilized the yields of US government bonds. Powell reiterated that the recently adopted $ 1.9 trillion package of budget support for the economy will not cause an excessive acceleration in inflation, and the expected rise in consumer prices this year will be temporary.
In terms of macroeconomic statistics, data on new home sales became known in the US yesterday. At the end of February, the indicator decreased by 18.2% (m / m) compared with an increase of 3.2% (m / m) a month earlier, which turned out to be significantly worse than the consensus forecast of -6.5% (m / m) …
Also in the States became known March data on the index of business activity in the manufacturing sector from the Federal Reserve Bank of Richmond. The indicator increased by 3 pp to 17 points, which was the highest value in the last three months.
Preliminary data on the Markit PMIs in Germany for March were released today. Thus, the PMI in the manufacturing sector increased by 5.9 percentage points to 66.6 points, exceeding the consensus forecast of 60.8 points. At the same time, the indicator for the service sector rose by 5.1 percentage points to 50.8 points, while analysts had expected a value of 46.2 points.
Further, during the day, there will be similar indicators for the eurozone and the United States. In addition, data on orders for durable goods in the United States and on the consumer confidence index in the eurozone will become known today, as well as a speech by Jerome Powell before the Senate.
The EUR / USD rate is testing the level of the previous local minimum, if it fixes below which, the downward trend is likely to continue. At the same time, stochastic lines are approaching the oversold zone, which may indicate a limited downside potential for the instrument in the short term. Immediate support is located at 1.1800.
This information is not investment advice.