2016-10-26 13:14:50

The USD is declining on the weak US economic data after the rise earlier. It became known on Tuesday that US consumer confidence index for October, adjusted for seasonal changes has dropped to 98.6 against 103.5 in September and the forecast of 101.0. Some investors believed that the USD was slightly overbought and they decided to take profit in the long positions, as the USD has grown by 2.5% in October. The index Wall Street Journal, which shows position of the USD against a basket of 16 currencies, remained almost unchanged at the level of 88.57(close to the highs of March at the level of 88.90).

However, despite the recent rise in the pair EUR/USD, it is expected that the USD will continue to strengthen in the market when investors realize that the rise in the interest rate by the US Fed in December is inevitable.

According to CME Group, probability of the rate hike is 78.3%. In mid-September such probability was estimated at the level of 50%.

Last week, the ECB left interest rates unchanged at the level of 0%. Deposit rate for commercial banks was also remained unchanged at the level of -0.4%. At the press-conference, ECB Governor Mario Draghi has said that the ECB may extend asset purchase program, which expires at the end of March 2017.

On Tuesday, Mario Draghi has confirmed that the ECB will continue extra soft monetary policy until inflation reaches the target level.

Based on the Draghi's statement it can be assumed that at the meeting in December the ECB may extend asset purchase program, which is due to terminate in March.

Yesterday in Berlin Draghi has said that the ECB will continue to adhere to soft monetary policy,, which is necessary to reach the target inflation rate of 2%.

On Wednesday the pair EUR/USD can be affected by the US data on home sales in September (at 17:00 GMT+3), foreign trade data for September (at 15:30), Markit composite index of business activity and the index of business activity in the service sector for October (at 16:45).EUR/USD: the pair is rising, due to the take profit orders on the USD long positions.  Fundamental analysis for 26/10/2016