Data on the US economy and statements made by representatives of the Federal Reserve, including the candidate for the post of the new head of the committee, supported the US dollar. Because of this, the greenback managed to play a number of positions against the European currency and the British pound.
According to the report of the US Department of Commerce, sales of new homes in the US for the month of October of this year rose, indicating a good state of the real estate market. It is important to note that in September, sales growth was also recorded.
The data indicated that sales in the primary housing market for the month of October increased by 6.2% and amounted to 685,000 homes per year. Economists had expected sales to fall by 6.4% to 624,000 homes a year. In comparison with the same period of the previous year, sales increased by 18.7%.
Fed representative Robert Kaplan said yesterday that it would be appropriate to raise rates in the near future. The speech was about the planned increase in interest rates by the Central Bank in December of this year. According to Kaplan, given the economic and financial risks, the Fed should raise rates gradually and patiently.
As for inflation, the representative of the Fed expects that pressure will increase over time and therefore, it is necessary to avoid an aggressive rate hike. Robert Kaplan also believes that the economy has approached full employment.
Fed spokesman William Dudley's speech yesterday drew attention to the fact that Powell's candidacy for the presidency of the Fed is a really good choice. Despite the change in the head of the Fed, the prospects for rates remain the same. Dudley expects the Fed to continue in gradually increasing short-term interest rates. He also believes that a good labor market situation will eventually lead to an increase in inflation.
The US dollar rose sharply after the speech of the candidate for the post of head of the Fed, Jerome Powell. He expects interest rates to grow a little more and the balance of the Fed to decrease. Powell also said that he will do everything in his power to achieve maximum employment and a target inflation rate.
As for the technical picture of the EURUSD pair, it was not possible to get a hold of the key resistance levels. As the expectations for an increase in the US interest rate in December this year increase, the US dollar can significantly strengthen its positions against a number of risky assets. A break below 1.1890 would be a good signal for a bigger sellout of the euro with an update to 1.1850 and an exit at 1.1810 in the short term. To form a new upward trend, the EURUSD pair needs to exit above the level of 1.1920, which will lead to the end of a number of stop orders and the update of monthly highs to around 1.1960.