Traders remain cautious, waiting for new hints about further actions of central banks. Today, the FOMC meeting minutes will determine the sentiment of the greenback’s traders. Meanwhile, traders of the euro have to predict the ECB’s future actions by themselves, evaluating preliminary PMI data for October.
The eurozone preliminary PMI data exceeded even the most optimistic forecasts. The indicators increased instead of falling, though remaining in the red. In particular, the manufacturing PMI rose to 47.3 points from 46.4 points instead of dropping to 45.7 points.
The services PMI remained unchanged, whereas analysts had foreseen a decline to 47.8 points from 48.6 points. As a result, the composite PMI managed to climb to 47.8 points from 47.3 points instead of sliding to 46.8 points.
In the UK, the situation is almost the same. The only difference is that the indicators remained at the same levels. Economists had expected a drop. However, these reports failed to revive the market.
Investors are waiting for the same data from the US. However, the forecasts are initially more optimistic. Since in Europe, all the indices are well above the forecast, the same situation may take place in the US. In the event of this, the US dollar will show a considerable increase, but it is likely to be limited.
Tomorrow, the US will celebrate Thanksgiving Day. That is why the unemployment claims reports are published today slightly before the preliminary PMI reports. Notably, forecasts for unemployment claims are not such rosy. Thus, the number of first-time claims may increase by 6 thousand, while the number of continuing claims may rise by 7 thousand. Although the change is insignificant, the labor market situation is worsening, which will cap the greenback’s appreciation.
What do we see on the trading charts ahead of the US trade? The euro/dollar pair slackened the correctional process from the resistance level of 1.0500 near 1.0220. As a result, the pair started rising and climbed above 1.0300. In other words, the euro slightly recovered after the recent correction.
If the price consolidates above 1.0300, it may continue rising to hit a new local high of November.
If the pair settles below 1.0300 on the daily chart, the correctional movement is likely to be continued.
The pound/dollar pair has been hovering within the sideways channel of 1.1750/1.1950 for a week already. Although the range is wide, we see stagnation that was formed when the pair was rising from the low of the downtrend.
Under the current conditions, traders should remain focused on the limits of the range. It means that the price rebound from either limit is a temporary strategy. The breakout strategy (1.1750/1.1950) is still the main one as it may indicate a further movement of the quote.
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