FINAM FOREX: US dollar continues to fall

17 December 2020

Anna Zaitseva, analyst, FINAM Group

On Thursday, December 17, the American currency continues to fall. The DXY dollar index is down 0.48% and is trading below the psychologically important 90,000 mark, while the EUR / USD rate is up 0.25% and is at 1.22290. A day earlier, the DXY dollar lost 0.06%, while EUR / USD gained 0.38%.

Positive sentiments still prevail on global markets, contributing to an increased demand for risky assets, which, in turn, does not affect the US dollar. Investors are waiting for a new package of fiscal support measures for the US economy. Thus, the leader of the Republican majority in the Senate Mitch McConnell made it clear that Congress would not end the year without agreeing on this bill, which raised hopes for a successful outcome of negotiations between Republicans and Democrats on this issue.

The key event on Wednesday and, perhaps, the whole week was a press conference by Fed Chairman Jerome Powell following a two-day meeting of the regulator. The Federal Reserve left its key rate unchanged and confirmed the volume of the asset repurchase program at the level of at least $ 120 billion per month until significant progress is made towards achieving employment and price stability targets. The Fed also improved its forecast for US GDP growth for next year from 4.0% to 4.2%, and for unemployment from 5.5% to 5.0%.

As for macroeconomic statistics, preliminary December data on PMIs in Germany, the eurozone and the US were released yesterday. So, in Germany and the eurozone, growth was recorded in terms of both the industrial sector and the service sector, which turned out to be better than analysts’ expectations. Meanwhile, in the United States, both indicators fell, while in the service sector the index dropped below the consensus forecast, which is probably due to the strengthening of restrictive measures in a number of American states.

Also yesterday, the data on retail sales in the US became known. In November, the indicator fell 1.1% (MoM) versus a 0.1% (MoM) decline a month earlier, while analysts had forecast a more moderate decline of 0.3% MoM.

Inventories in the United States rose 0.7% MoM in October, as expected, versus 0.8% MoM gain in the previous month.

On Thursday, it will be necessary to track the publication of inflation data in the eurozone, and in the US – on the number of building permits issued, the volume of new home construction, the number of initial claims for unemployment benefits and the index of business activity in the industrial sector from the Federal Reserve Bank of Philadelphia.

The EUR / USD quotes have overcome the level of the previous maximum located at the level of 1.2174, which speaks in favor of the continuation of the upward movement. The next target is the level 1.2500. Stochastic lines are directed upwards, which is favorable for buying.

This information is not investment advice.

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