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EUR / USD starts the new year with volatile trading

Jan 3 2019, 04:33 AM (CST) | Fortfs.com

EUR / USD opened a new trading year with a significant decline, by 1% on the background of a large-scale dollar gains. On Wednesday, USD dollar index at the maximum showed an increase of more than 0.7%, but at the end of the American trading session, the market situation changed dramatically. The US currency began to actively give up its position after the publication of information from Apple on the decline in forecasts for sales and profits in the first quarter of 2019, amid actively declining demand in China. This news sharply reduced investor interest in the dollar, as traders now fear that a further deterioration in the global economy will have an increasing impact on the US economic growth rate. High volatility, as well as a slowdown in economic indicators may lead to another revision of forecasts by the Fed in the matter of further raising the interest rate in the United States. On the eve, Donald Trump tried to reassure financial markets, stating that he believes that growth in financial sites would resume after a trade agreement is concluded between the US and China, but so far his comments have not had an impact on trading.

There is no news in Europe so far, as the key influence is provided by news from the USA. European currency remains rather weak on the background of persistent high domestic political and economic risks, but due to the weakening of the dollar's position, EUR / USD pair is still held in a narrow range of trades, which was designated by the market in December 2018.

Increased market concerns about a possible slowdown in the US economy, amid negative trends in the global economy will significantly increase investor interest in statistics from the United States. Today, in anticipation of the publication of the main report on the labor market, a report from ADP will be presented. Fresh data on the PMI of the US manufacturing sector may have a stronger impact on the market as well, experts predicts to see a decline from 59.3 to 57.7 points.

On the chart, despite the increase in volatility, the situation has not fundamentally changed. The quotes is still located in the horizontal channel 1.1275-1.1480 from which the currency pair fail to get out. Now the price is in the middle of the marked range, so we can expect to maintain the current range of trading for at least a day. It will be possible to wait for the development of a directional trend movement only after the currency pair has been fixed behind the side chapels of the outlined, which can give a significant impetus to the further price movement.

 Resistance Levels: 1.1480, 1.1620, 1.1820

 Levels of support: 1.1300, 1.1275, 1.1180.

The main scenario is a local growth towards the level of 1.1480.

An alternative scenario - consolidation below 1.1350 and decline to 1.1275.

The situation in the market remains very uncertain, until the price can get out of the channel 1.1275-1.1480, so to open positions in the market is on the borders of the outlined outset.

 
 
 

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