The chain of favourable events has boosted the U.S. Dollar against the Euro and the British Pound. Firstly, the ADP employment data for October showed the number of jobs created in the U.S. private sector was 571,000, well above the forecasted 400,000. The official Non-Farm Payrolls report released last Friday confirmed a rise of 531,000 new jobs in October.
Last Thursday the Bank of England (BoE) left interest rates unchanged at 0.1% while continuing its government bond purchasing programme at 875 billion Pounds and 20 billion Pounds of corporate bond purchases. Investors were deeply disappointed as many were betting the BoE would rise interest rates. But eventually that didn’t happen.
EURUSD returned to its October lows, falling to 1.1513, which is even slightly below the low of October 12 at 1.1524. The technical picture has changed as a possible rise of the Euro to 1.1693 is seen as rebound amid the downward trend. This is confirmed by the moving average EMA21 that is above the price on the weekly timeframe chart. It is worth noting that the EURUSD touched this average and quickly scaled back. So far, the minimum in EURUSD is holding and we might have a chance to see a “double dip” pattern on the weekly timeframe chart. But if the Euro falls below 1.15 the EURUSD may dive to 1.1400-1.1430 and further down to 1.1230-1.1250.
GBPUSD was also close to September lows at 1.3412-1.3415. So far the decline of the Pound is limited at 1.3424. If the Pound fails to recover over the coming days, it may plunge to the next strong support level at 1.3200.
Both the Euro and the Pound may try to rebound at the beginning of this week, but the U.S. October inflation figures that are due to be released on Wednesday may knock out all their efforts. The Consumer Price Index (CPI) is expected to be at 5.8% year-on-year, the highest since the Global Financial Crisis in 2008. The Federal Reserve (Fed) has started to gradually taper its bond purchasing programme by just $15 billion a month. But such high inflation numbers may speed up the process.
After the last time the CPI figures in the United States were released, the interest rate hike was expected to begin in September 2022, but now investors expect a first interest rate hike by the Fed in June 2022.
With all this in mind we may suggest that the pause in Euro and Pound sell-offs may be very short.
Last Thursday the Bank of England (BoE) left interest rates unchanged at 0.1% while continuing its government bond purchasing programme at 875 billion Pounds and 20 billion Pounds of corporate bond purchases. Investors were deeply disappointed as many were betting the BoE would rise interest rates. But eventually that didn’t happen.
EURUSD returned to its October lows, falling to 1.1513, which is even slightly below the low of October 12 at 1.1524. The technical picture has changed as a possible rise of the Euro to 1.1693 is seen as rebound amid the downward trend. This is confirmed by the moving average EMA21 that is above the price on the weekly timeframe chart. It is worth noting that the EURUSD touched this average and quickly scaled back. So far, the minimum in EURUSD is holding and we might have a chance to see a “double dip” pattern on the weekly timeframe chart. But if the Euro falls below 1.15 the EURUSD may dive to 1.1400-1.1430 and further down to 1.1230-1.1250.
GBPUSD was also close to September lows at 1.3412-1.3415. So far the decline of the Pound is limited at 1.3424. If the Pound fails to recover over the coming days, it may plunge to the next strong support level at 1.3200.
Both the Euro and the Pound may try to rebound at the beginning of this week, but the U.S. October inflation figures that are due to be released on Wednesday may knock out all their efforts. The Consumer Price Index (CPI) is expected to be at 5.8% year-on-year, the highest since the Global Financial Crisis in 2008. The Federal Reserve (Fed) has started to gradually taper its bond purchasing programme by just $15 billion a month. But such high inflation numbers may speed up the process.
After the last time the CPI figures in the United States were released, the interest rate hike was expected to begin in September 2022, but now investors expect a first interest rate hike by the Fed in June 2022.
With all this in mind we may suggest that the pause in Euro and Pound sell-offs may be very short.
