If you still have doubts about buying the US dollar, it is time to change your mind. The greenback has strong fundamental reasons for a further rise. For example, on Tuesday, WhatsApp, Facebook, and Instagram suffered outages, thus boosting the US currency.
Until Thursday, China will be on holiday. That is why the Evergrande issue will not affect the market that strongly. However, investors are still interested in the problem. Of course, at the end of the week, it may again become the main driver of the market. Notably, the US labor market report is likely to be of primary importance.
Markets are concerned about the skyrocketing inflation. This may affect the US services PMI figures. It is a leading indicator to the non-farm employment data. The business activity in the services sector is likely to remain high, thus attracting investors' attention. The Fed may consider such news as a signal to start the tapering of the QE program.
The US debt ceiling issue poses risks to the US dollar. The default may take place in just two weeks. Janet Yellen supposes that a failure to raise the debt ceiling may push USD lower. That is why it is necessary to settle the issue as soon as possible.
Nevertheless, inflation remains the key problem in the US. Next week, the US will report on its consumer price index. If the indicator surges, the Fed may tighten the monetary policy earlier than planned. Such expectations are likely to boost the US dollar.
The greenback is gaining in value against all major currencies. The US dollar index has recently reached a new high of 94.50 and the peak logged in September 2020 located at 94.74. This may prevent USD from a further rise. Nevertheless, the index may test 94.50 once again.The euro is still under pressure. The currency will hardly resume growing in the near future. What is more, the negotiations on the formation of a ruling coalition in Germany have stalled, thus pushing the single currency lower.Traders of the euro fully understand the situation. On the chart, we can see that the asset is trading below the 50,100, and 200 SMA. Sellers are controlling the market.If in the next few weeks, the quote drops and fixes below 1.1600, it may slump to 1.1400.
The market sentiment will change, only if the price consolidates above 1.1675. However, the currency will hardly rise, it will just enter a sideways channel. Since the US will disclose important reports at the end of the week, the euro may trade flat until Friday.Support levels are located at 1.1590, 1.1562, and 1.1500. Resistance levels are located at 1.1610, 1.1640, and 1.1665.