At yesterday’s trades the pair EUR/USD continued the decline, which has been lasted for the fourth consecutive session. European currency has lost over 100 points over one day, going down from 1.0788 to 1.0637. The decline in the pair was triggered by favourable US labor market statistics. Despite the fact that the number of applications for unemployment benefits has grown from 281 thousand to 267 thousand, the data was still better than analytics’ expectations who predicted the rise of 285 thousand.
Positive macro-economic statistics increases market participants’ expectations of the increase in the interest rate by the US monetary authorities in the near future. If it happens soon, the attractiveness of the USD as the investment instrument will increase considerably. The minutes of the US FOMC meeting showed the investors that some of the members of the Open Market Committee believe that the increase in the interest rates can be introduced in June. The head of FRB of New York William Dudley, who made his speech earlier on the same day, dais that it is possible that tightening of the monetary policy can take place in June, in case US labor market will recover steadily. One of the factors, which cause the delay the rise in the interest rate - is inflation, which is still below the target level due to the decline in energy prices.
Today, investors are waiting for the speech of the head of FRB Mr. Richmond and the US data on import price index. The latter index is one of the leading inflation indices; therefore, if the forecast of decline by 0.4% turns out to be correct, the USD can lose its positions.
Support and resistance
Resistance levels: 1.0700 (important psychological level), 1.0788 (yesterday’s highs), 1.0887 (highs of 8 April).
Support levels: 1.0637 (yesterday’s lows), 1.0600 (lower line of Bollinger bands indicator), 1.0500 (important psychological level).
Short positions can be opened below the level of 1.0637 with the first target of 1.0600 and the next one of 1.0500. Long positions can be opened from the level of 1.0700 with the targets of 1.0785 and 1.0885.