FX.co ★ EUR/USD is back on the path of financial war

By the end of the week, the dynamics of the US and European currencies became a bit contradictory. Earlier, dollar actively grew, strengthening in the EUR / USD pair, whereas euro weakened. Now, however, analysts say that small losses have not spared the dollar.

A number of geopolitical and economic factors have superimposed on the current weakening of euro and the strengthening dollar. These include both the military conflict between Iran and the United States, as well as the economic reports from the Euro zone and America. Be reminded that on Wednesday, January 8, the report of ADP Research Institute on the number of people employed in the private sector of the American economy in December was published. It was positive, showing an increase in the number of jobs by 202 thousand. The services sector occupied the palm, where growth reached to 173 thousand jobs, while in the manufacturing sector, it felt to 29 thousand. According to experts, the current data indicate the stability of the American labor market.

Currently, the situation was not in favor of euro. The recovery of dollar after the release of positive reports on the labor market and activity in the service sector deprived euro of all advantages. Experts say that the strong data significantly reduced the possibility of additional monetary policy easing in the United States.

According to recent forecasts, in December 2019, the American economy generated 160 thousand new jobs, excluding agriculture. The preliminary data also states that the unemployment rate in the country should not exceed 3.5%. However, experts have found a dark spot in the overall positive position of the dollar, which are the series of technical signals that indicate the looming weakness of the US currency. Analyzing the chart of the dollar index, experts noted that the 50-day moving average crossed the 200-day moving average. This situation was recorded in May 2017, and became the threshold of a five-month decline of the dollar. On Friday, January 10, the 21-day moving average crossed the 200-day line in the EUR / USD pair for the first time in 2.5 years. Analysts emphasize that previously, such intersections turned into a rapid rise of euro.

At the moment though, euro is still under pressure from the negative macroeconomic factors. According to a report on German production orders, the country industrial sector is experiencing a long stagnation. In December, the volume of industrial orders in Germany decreased by 6.5%. Earlier, experts also recorded a gradual reduction in production. Analysts fear that the current difficulties in German industry will turn into problems for the GDP of the entire Eurozone.

The report on the unemployment rate in the Euroblock countries published on Thursday, January 9 is a spoonful of honey in a barrel of tar for the euro. This indicator, which grew to 7.6%, was better than forecasts. According to the report, the unemployment rate remained the same in November last year which is 7.5%, and the number of people who lost their jobs decreased by 10 thousand.

The current situation was in the hands of the bears. Experts have recorded a long "bearish" market sentiment in relation to EUR / USD. The tandem was under pressure from sellers for six sessions in a row. At the same time, euro strongly resisted the transition of a downward trend, but its efforts were not successful.

According to analysts, it was the bears that pushed the currency to the support level of 1.1100. Experts consider this level to be the key one - a kind of pivot point for the EUR / USD pair. It was here that the decisive battle was played out the other day: the "bulls" rebuffed the "bears".

There is now, however, a lull in the dynamics of the EUR / USD pair. A day earlier, the tandem's quotes sank to 1.1105, having experienced a series of ups and downs.

On the morning of Friday, January 10, the EUR / USD pair was still marking time, slightly rising to 1.1107. Experts believe that in the near future, the tandem will enter a downward spiral.

Later on, these assumptions were confirmed and the EUR / USD pair started to slide down to the low levels of 1.1097–1.1098, falling in an effort to find the bottom from time to time.

According to experts, the situation of the EUR / USD pair is at the moment, developing in favor of the dollar. It is confident, despite some mistakes, and intends to move on to new heights. Dollar is supported by a strong US economy, whereas the Eurozone's economy is sagging. This knocks the ground out from under euro's feet, shaking the position of the currency.

In general, the EUR / USD pair is trying not to lose stability, adequately accepting the challenges of the market.