The dollar is trading on Tuesday without significant dynamics, but it still strengthens against the Euro, Japanese yen, and the British pound. The Euro loses the advantage gained during the previous session, as investors have once again turned their attention to the condition of the Eurozone economy and the policy of the European Central Bank.
The interest of currency traders was also hinted at Wednesday’s publication of the report of the last US Federal Reserve session in January. The experts rely on the protocol to allow them to understand how confident central bankers are in regulators ‘patience’ in the plans to further raise the interest rate.
Earlier, it became known that a coalition of 16 US states sued over President Donald Trump due to his decision to declare a national emergency in order to receive funds for the construction of a wall along the border between the US and Mexico. The White House has not commented on the lawsuit. Investors expect the further course of events.
After hitting fresh 2019 peaks in the boundaries of 97.40 at the end of last week, DXY met some selling pressure and receded to the 96.60 area, where some decent support emerged. A deeper pullback is expected to meet contention in the 96.41-96.33 zone, where coincide the 55-, 100- and 21-day SMAs.
In the meantime, further consolidation is not ruled out in the short-term horizon, while the next target on the upside remains at yearly peaks nearly 97.35-97.40 band.
The EUR/USD currency pair is down today to 1.1296 USD, compared to 1.1311 USD on Monday’s closing. Yesterday, the euro climbed 0.16%, rallying from its three-month low at 1.1234 USD.
After a brief adventure to daily highs beyond 1.1320, EUR/USD has now receded to the 1.1300 neighborhood in the wake of mixed results from the ZEW Survey.
A break below 1.1234 USD (2019 low on February 15) would target 1.1215 USD (2018 low November 12) en route to 1.1118 USD (monthly low).
On the upside, the next hurdle is located at 1.1339 USD (high Feb.18) seconded by 1.1356 (23.6% Fibo of the September-November drop) and then 1.1399 (100-day SMA).
The European currency has given away part of its earlier gains after the ZEW Survey came in on a mixed tone for the current month. In fact, Economic Sentiment in Germany improved to -13.4, while Current Conditions dropped to 15.0, missing consensus. On the broader Eurozone, the Economic Sentiment also surprised to the upside, coming in at -16.6.
The ECB governing council is expected to cut its projections on GDP growth and inflation in the Eurozone at its March 7 meeting against the backdrop of the most significant five-year slowdown in the region’s economy.
The yield on sovereign bonds of Eurozone countries, especially Germany, is down due to the worsened outlook for the economy, which also has a bearing on the Euro.
The value of British pound dropped to 1,2902 USD from 1.2924 USD on Monday.
In regards to the near-term future, most likely, the currency exchange rate will be supported by the 200-hour simple moving average to break the resistance of the monthly pivot point at 1.2924 USD. In this case, the rate will end the trading session at the 1.2950 USD level.
Moreover, the during today’s UK Average Earnings Index release at 9:30 GMT, the British Pound depreciated against the US Dollar by 12 pips or 0.09% to push the rate towards the 200-hour simple moving average at the 1.2914 USD mark.