The pair of euro-dollar entrenched in the 14th figure, but for further upward movement, an additional impulse is needed, an additional news driver. The rich economic calendar of today will play a key role in this regard. Today, the dollar will either receive support, or market participants will increase sales of the US currency.
Let me remind you that at its December meeting, the Fed has reduced the approximate number of rate hikes next year to two. At the same time, he lowered forecasts for GDP growth and inflation, thus justifying the decision to slow down the tightening of monetary policy. The dollar's reaction was relatively low-key. The regulator chose not the softest scenario, so the US currency held back the onslaught of sellers, although it fell in price across the market. Nevertheless, the risk of further collapse still exists.
Actually, Jerome Powell indirectly confirmed this assumption. On Wednesday, he stated that in 2019, the US economy would not be so "favorable" to the Fed's forecasts, as it was this year. In particular, inflation has already presented an "unpleasant surprise", as its growth dynamics are contrary to expectations American regulator. In other words, if other indicators show similar behavior, then even more modest intentions of the Fed can remain on paper. Here you can recall the years 2015 and 2016, when the Fed for months declared a "hawkish" attitude, but the economic situation forced Janet Yellen to move the decision date. As a result, during this period, the regulator raised the rate only twice, at the final December meetings. To date, the market rightly fears deja vu, given Powell's insecure position.
Thus, today's releases may reinforce investor concerns about further Fed action. The fact is that today several quite important indicators will be published in the States. Firstly, this is the volume of orders for durable goods, secondly, the final estimate of GDP for the 3rd quarter, and thirdly, the index of expenditures on personal consumption, one of the favorite indicators of members of the American regulator.
The release of data on orders for durable goods is leading for such a component of GDP as investment, so its dynamics can seriously affect the mood of traders. In October, this indicator fell into the negative area, reaching -4.4%. This is the weakest result since July 2017. According to general forecasts, the indicator is expected to recover today, up to 1.8%, although, according to some experts, it will not leave the negative area, thereby putting pressure on the greenback.
But the strongest volatility, in my opinion, will cause the release of Core PCE Price Index, that is, the index of personal consumption expenditures. It is believed that this is one of the main indicators, which is closely monitored by the Fed, so its slowdown will become an alarming signal for dollar bulls.
The consensus forecast indicates that the indicator will demonstrate minimal growth, up to 0.3% on a monthly basis and up to 1.9% per annum. And if on a monthly basis, the index has actually been marking time for two years (in the range of 0% -0.3%), then in annual terms it has been decreasing since August. Therefore, if today's figures do not meet expectations, the dollar will fall under the wave of sales, even if the data on orders and GDP come out at the forecast level. If the American statistics is in the "green zone", interest in the dollar may return, although the resumption of the rally is still out of the question.
Another factor that may affect today's trading is a possible "shatdown". Yesterday evening, deputies of the House of Representatives voted for the republican version of the interim state budget, while approving Trump's idea of allocating 5 billion hryvnia to build a wall on the border with Mexico. Previously, the Senate voted for a different version of the interim budget, which did not include the costs of this construction. Now the bill will again be returned to the Senate for consideration: if the deputies do not support it, then the work of several federal departments may be terminated on Saturday night. This fact will exert background pressure on the US dollar.Technically, the euro-dollar pair still needs to overcome the mark of 1.1515 (the upper limit of the Kumo cloud on the daily chart) to confirm the strength of the upward movement. In this case, the Ichimoku Kinko Hyo indicator will generate a bullish "Line Parade" signal. But the support level is the mark 1.1380, this is the lower boundary of the above cloud.