The growth potential of the euro is limited due to the political problems in Germany, as many investors remain uncertain about the German Chancellor Angela Merkel's ability to form a government. On the other hand, the US dollar is becoming less popular after yesterday's speech by the Fed Chairman. Today, the publication of the minutes in the Federal Reserve System October meeting can not clarify the situation with regard to the plan to raise interest rates in the US.
The sales growth of the US in the middle of the US housing market.
According to the report of the National Association of Realtors, sales in the secondary housing market in October for this year has increased by 2.0% compared with the previous month, which reached to 5.48 million homes per year. Economists had expected that growth in October would be 0.2% to 5.40 million homes.
Fed Chairman Janet Yellen said that the Fed's balance sheet, but US inflation is below the target of 2%.
J. Yellen is focused on the fact that the Fed is close to achieving a double task (the question of reducing the balance and raising interest rates without the threat of negative impact on the economy) labor market situation. In the opinion of the Fed Chairman, if the rates are raised too quickly, it could cause an economic recession, while a sudden curtailment of incentives can lead to inflation.
From these statements, it can be concluded that the increase in US interest rates in December, which most recently was convinced by the leading experts, may put pressure on the US dollar.
At the end of the speech, Janet Yellen stated that she must be vigilant about threats from inadequate financial supervision and regulation.
As for the technical picture of the EUR/USD currency pair, a breakout of the range 1.1755-60 could lead to a larger upward wave in the trading instrument with an update of 1.1800 and a monthly maximum output in the area of 1.1860.
In case that Fed reports for this day contain something interesting about the prospect of tightening monetary policy in December this year, the demand for the US dollar may rise which could lead to a reversal towards the region of large support levels of 1.1680 and 1.1640.
* The presented market analysis is informative and does not constitute a guide to the transaction.