The markets are getting higher and higher. There were all the prerequisites for succeeding growth. Investors continue to be in a good mood, as nothing bad has happened in recent days, and the old growth drivers have not gone away.
US President Joe Biden's new incentive program is close to approval. It is quite possible that it will be approved in the very next few days. In addition, there are real signs of a decrease in the number of infected people. This information was also confirmed by the Director-General of the World Health Organization. The head of the WHO, Tedros Adhanom Ghebreyesus, made it clear that the weekly number of new cases of infection was reduced by almost half compared to the figures of the beginning of January. Positive results are added by the progress in universal vaccination of the population. In addition, judging by the reports of US companies, the business for the most part is in good condition and is ready to quickly restore the economy.
Tuesday was a fairly calm day, no important statements and publications. Investors will pay attention to Biden's first trip as president outside of Washington. He will deliver a speech in Wisconsin on the pandemic, a package of support measures for the country's economy. The president's speech may have a positive impact on investor sentiment.
The picture is just perfect, so it will be possible to see new highs in the indices. But something in all this makes us wary, including investors. Maybe it's all too good. The course of trading last week clearly demonstrated the uncertainty and doubts of the players, which may eventually result in profit-taking. More and more positive factors are needed to increase risk appetite without corrective pullbacks. After a long march since November, it is easy for markets to stumble and fail for a while, despite hopes of recovery. In the meantime, we're dealing with growth.
The downward trend in the dollar continues, which has been going on for several days. The border of the existing trend has shifted lower to the area of the 90.4 mark on the dollar index. While the US currency is under pressure, the dollar bears will look for new impulses to sell. We can talk about a reversal of the trend in the event of a sharp breakthrough in growth and in case the dollar index closes above the 90.4 mark. Buyers of the dollar became more active during the US session.
Meanwhile, in favor of a downward trend, the state of dollar liquidity indicators can be cited. Here, the indicator signals the ongoing monetary pressure on the greenback throughout the week.
Current trends are likely to remain unchanged. In this regard, we need to carefully monitor the rhetoric of the US Federal Reserve members. If the third bailout package from the Biden administration is passed, the doping-ridden markets will continue to rise, and the pressure on the dollar will increase.
The decline in the University of Michigan's consumer confidence index may serve as a trigger for faster adoption of incentives. A similar weakness is not excluded in the retail sales data, which will be released on Wednesday. If the report turns out to be disappointing, then the US currency index risks falling below 90.0 points by the end of the week.
The EUR/USD pair hit resistance around the 1.2150 mark. Blame the cooling in the economic recovery. Data on industrial production indicated a decline. Prior to this, business sentiment indexes turned down, which set up markets for a second recession due to the winter outbreak of the pandemic.
The latest batch of macroeconomic data, namely the assessment of business sentiment from ZEW, should put an end to the tug of war between the bulls and bears. The index of investor confidence in the German economy unexpectedly rose to 71.2 points from 61.8 points in January. In addition, the second estimate of the fall in eurozone GDP was better than the first. Some macroeconomic positivity should have increased the euro's volatility in order to increase the quotes. However, as a fact, the pair declined back to the 1.20 mark.