FX.co ★ Market direction is not determined

The EUR/USD pair continues to trade in a narrow lateral channel, paying no attention to the release of a number of important fundamental data on both the euro area economy and the US economy.

During the North American session on Wednesday, the survey results from the Institute of Supply Management were published. which indicated that the index of supply managers for the non-manufacturing sector in the US in September this year increased significantly. It reached 59.8 points against 55.3 points in August.

Economists predicted that the index will be 55.2 points.

Yet, the business in the service sector is not that good. According to the data, the growth of activity in the US services sector slowed in September. The report IHS Markit indicated that the index of supply managers for the service sector in September fell to 55.3 points compared to 56 points in August. As a reminder, the values above 50 indicate an increase in activity. Economists expected that the index would be 55.1 points in September.

The speech of the Fed Chairman did not have any impact on the market, as Janet Yellen did not talk about monetary policy and the economy. At the opening of the FRS-St. Louis conference, the Fed Chairman touched on the banking sector. She stated that the Fed is working hard to adjust the regulation and supervision of banks in accordance with their sizes. Yellen also drew attention to the need for the committee to focus on ensuring post-crisis regulation.

Pressure on the US dollar was created by the progress of conversations around the next chairman of the Federal Reserve System. The choice of Donald Trump would directly depend on whether he is satisfied with the current policy of the Fed or he wants to change it.

There are only six candidates. Two of them continue to adhere to the current course, while the other two candidates take the opposite side with respect to monetary policy.

Looking at the technical perspective, it still remains the same. A breakout above the level of 1.1740 will lead to the weakening of the euro and a return of the trading instrument to the lower boundary of the area of 1.1700. Going beyond the level of 1.1780 will allow bulls to build long positions, which will bring the EUR/USD pair to new weekly highs around 1.1830 - 1.1880.

Today, the Australian dollar fell sharply against the US dollar after a report showed that there was a very strong drop in retail sales in Australia. This could have a significant impact on the pace of economic recovery in Australia. According to the August data this year, the retail sales in Australia fell by 0.6% compared with July. Also, remember that it dropped by 0.2% in July.