2016-10-05 15:44:51

Yesterday’s information in the mass media that the ECB is considering to reduce QE program has caused sharp rise in the Euro. Within one hour the pair EUR/USD went up by 80 points, rising above the level of 1.1235. The information that the ECB may gradually reduce the bond purchase program was released by Bloomberg News.

In response to this news, the Euro has grown against major currencies. If positive momentum continues, the pair EUR/USD may rise to the upper line of the range at the level of 1.1285 and Fibonacci 23.6%.

Today, the pair EUR/USD received additional support from Fed Chicago President Charles Evans, who said that possibility of interest rate increase by the US Fed is very low. He also said that the Fed may use overheating of the economy in order to bring inflation to the desired levels.

If the inflation approaches to the target level of 2%, then, the Fed can raise the interest rate. Mr. Evans said that there should be convincing evidence that inflation is approaching 2%

Today, positive macro-economic indicators of Eurozone were released, which showed that according to Markit Economics, business activity index in the service sector of Eurozone has grown to 52.2 in September against the forecast of 52.0. The rise in the index above 50 causes the rise in the Euro, as this level proves economic growth in the service sector of Eurozone.

In Germany, the largest economy in Eurozone, business activity index in September has also grown to 50.9.

Today, some US news will be released as follows:

At 15:15 (GMT+3) ADP report on the number of employees in the private sector for September.

It is expected their number will decline by 11.000, to 166 000 against 177 000 in August, which can have a negative impact on the USD.

At 15:30: US trade balance for August.

At 16:45: Markit Economics business activity index (PMI) in the US service sector for September.

At 17:00: ISM business activity index (PMI) in the US services sector for September and the number of industrial orders in USA in August.

Volatility in the Forex market will increase at these time periods.

EUR/USD: will the ECB to cut the program of bond purchase?  Fundamental analysis for 05/10/2016