The unexpected content of the minutes of the Fed's last meeting put fear in some members of the Central Bank, including its leader, J. Yellen. The minutes indicated that consumer inflation may not reach the 2.0% target level. Coupled with a sharp appreciation of the euro, the data exerted considerable pressure on the rate American dollar.
The dollar finished the week on a minor note. This was also caused by the uncertainty of whether the tax reform will be adopted by the Senate or not. Earlier, the draft submitted by the Republicans to the Senate Finance Committee showed significant discrepancies in the approaches to the implementation of the new tax code. This caused a fall in positive sentiment for the dollar. Meanwhile, good economic statistics in Germany led to strong euro growth which had a cumulative pressure on the dollar index pushing it to fall below the 93.00 point mark.
Now, with the beginning of a new week in the market, the attitude towards the dollar may change. The reason for this may be the vote of the Senate on the D. Trump's tax reform on November 28. If the decision is positive and the key points of the reform coincides with the version of the Congress, the dollar can receive significant support. This is because the tax reform is associated with an increase in attractiveness of investments in dollar assets due to its protectionist content. It is expected that targeted stimulation will support not only the US financial sector, but also companies that have production in the country. It is also expected that this will cause the growth of demand for the shares of these companies, which in turn will cause the return of the national capital to the States primarily from emerging markets. This will be actively joined by capital from the economically developed countries in search of high and less risky returns.
These events will be signs that may strongly support the course of the US dollar.
Forecast of the day:
The EURUSD pair has every chance to start adjusting to 1.1885 and then to 1.1855 if it overcomes the 1.1910 mark. The fall of the pair could intensify on the background of the adoption by the US Senate of a new tax code on November 28. If it will generally correspond to the version of the Congress, we can expect a noticeable strengthening of the dollar in the currency markets.
The USDJPY pair is consolidating ahead of the adoption of the tax reform in the United States. If it is adopted, we should expect the pair to grow to 112.00 with a prospect of an increase to 112.70 in the near future.